How to Improve Your Home Value
Point of Interest
When it comes to increasing your home’s value, spending the time and money on kitchen remodels, maintenance and updates that improve curb appeal can be some of the best investments.
Have you wondered how to increase your home’s value? Your house is probably your most significant asset, so it makes good financial sense to think about improving its market price. Even if you’re not planning to sell, increasing the value of your home will have a considerable impact on your net worth and ability to borrow. Choosing home improvement projects with your bottom line in mind is a shrewd financial move.
Why you should improve your home value
Your home’s value is the dollar amount it would likely bring if you sold it today. That’s the figure you should be using to calculate your net worth (your assets minus your debts), and it’s the number your bank would use to set your limit if you took out a second mortgage.
One of the main reasons to improve your home value is that it can increase the amount of money you can borrow against your home. Let’s say you needed to access cash for an emergency or an opportunity. A cash-out refinance loan, which is one type of second mortgage, would probably be your first choice.
The amount you can borrow with that type of second mortgage would be limited to your home’s equity, which is the value on the day the bank’s appraiser visits your property, minus whatever you still owe on the house. Improving the value of your home can also improve the equity you have in your home.
You may also want to increase your home’s value because it makes fiscal sense to do so, even if you aren’t cashing out your equity. You want to reap the most profit when you sell your home, and to do that, you need to continually update and improve your home, which in turn improves the overall value.
Most people assume their house is appreciating in value over time, but if your home’s price isn’t rising fast enough to keep pace with inflation and expenses like taxes, insurance and repairs, you could be losing money every year.
Ultimately, though, the main factors that determine real estate value are location, neighborhood, school district and the recent selling price of nearby homes. All those things are outside your immediate control, although you can influence them by getting involved in local government, neighborhood associations and school boards.
You can control some elements of your home’s value, though, by choosing to make the right home improvements. For example, updating the kitchen or improving curb appeal will typically increase the value of a typical home, but adding a swimming pool will not.
If you’re investing time and money in home improvement projects that help you enjoy your home, you might as well focus your efforts on those that will also increase its value.
Six ways to improve your home value
Choosing the right projects is the key to increasing the value of your home. These are the projects that experts agree are most likely to raise the market price of a house.
1. Update the kitchen — but not too much.
Kitchens are an important factor to buyers, who place a lot of value on stainless steel appliances, open floorplans and spacious work areas and cabinets.
Mid-range remodels cost about $66,000 to complete, according to Remodeling Magazine’s 2019 Cost vs. Value Report. Depending on the size of the job, you’ll likely recoup 60% to 80% of what you paid, according to the report — but it will ultimately depend on the condition of the home and the price point in your area.
Minor kitchen upgrades, with costs of around $21,000, are a better investment, yielding an average ROI of about 81%. In cities with robust real estate markets, a minor kitchen upgrade can return more than 100% on your investment.
2. Spruce up your bath.
Another improvement that can nearly pay for itself, or even show a profit, is with bathroom upgrades — but as with kitchen remodels, the return depends on your market.
In bustling cities in peak years, a bath upgrade can yield triple-digit returns. According to Architectural Digest, a mid-range bath remodel can recoup $1.71 per dollar spent. The average yield, however, is only about 50%, so be sure to research your local market before you sink a ton of money into a luxe bath.
3. Maintain the structure.
Many homebuyers are excited about finishing a kitchen or bringing in new paint colors, but even the most adventurous remodelers want a home with “good bones.”
No one wants to move into a house and deal with a leaky roof, wet basement or an old rusty water heater. Remodeling Magazine’s roundup of home improvement ROI numbers is topped every year by replacing or repairing roofs, windows and siding.
4. Replace the garage door.
The top item on Remodeling Magazine’s list last year was replacing the garage door, and it’s currently in second place on this year’s list. People spent, on average, $3,600 for a new garage door, and recouped $3,500, which is a 97.5% ROI.
For many homes, the garage door is a big part of the street view of the house, so updating and refreshing it has a powerful visual impact.
5. Improve your curb appeal.
According to Realtor.com, projects like garage doors that improve curb appeal have higher returns than interior projects. That explains why some of the other top projects on the Remodeling Magazine list include adding manufactured stone veneer (a 97% ROI) and improving wood decks (83% ROI).
Realtors say that a buyer’s first impression when they arrive at a house can make or break the sale. For that reason, repainting a porch or replacing the front door and landscaping can make a home much easier to sell and improve its value.
6. Correct your home’s flaws.
How do people make a profit flipping houses when most renovations don’t return as much as they cost? They buy houses with obvious problems and fix them.
If your house has a rotting carpet or crumbling ceiling inside, replacing the garage door might not be your best investment. Fixing the problems that are specific to your property will increase the value of your home much more than any general improvement.
Try to imagine that you are a buyer and walk through your house as if you’ve never seen it before. Start across the street, viewing the house from the curb and then walk through every room. If you’re not able to be objective, ask a trusted friend who has recently shopped for a home.
Look for major issues as well as things that are simple to fix or update.
The final word
When you’re looking at how to increase the value of your home, start by fixing any problems specific to your house. From there, research your local market and see what return people are getting on various home improvements.
Prioritize maintenance tasks for the roof, siding and windows. Consider whether a kitchen or bath upgrade would make your home a better fit with its neighbors. Finally, make sure to eyeball the front of your home to see if a new garage door, fresh landscaping or porch renovations could improve its curb appeal.