Want to know how to increase your home's value? Keep reading for our favorite tips and tricks on increasing property value.
Right now, the state of the housing market is a flurry. Prices are way up, bidding wars are all but guaranteed, and demand is far outpacing supply. In short: it’s a true seller’s market. For homeowners looking to cash in on the current market conditions and sell their home, there’s little effort needed in order to secure a record sale price. In fact, sellers are in such a strong position that nearly 30% of homes in 2021 were sold as-is — that is, without a home inspection — though we cannot endorse this decision by any means.1
For sellers, it seems there are fewer hoops to jump through than ever. But what about homeowners who want to get even more out of their home in this unprecedented market, either through a sale or by extracting home equity? If you’re wondering how to increase home value and tap into this seller’s market’s true potential, read on for seven proven ways from Truehold advisors to increase your home’s value.
Homeowners wondering how to increase home value should first be aware that this process is a bit of a balancing act. You want to hike up your home’s value, sure, but a $20,000 increase in the asking price isn’t worth it when the renovations on their own cost $50,000. For this reason, you should focus on home improvement projects with the greatest return on investment. On average, the return on investment (ROI) of a home improvement project is around 70% — meaning you can expect to see 70% of your expense tacked onto your home’s asking price; that other 30% is effectively left on the table.2
Keeping this in mind, many homeowners will opt for renovations with a low financial barrier of entry that will still drive up the market price. Some of these include:
While you may not recoup 100% of your investment from these renovations, making these additions before a home inspection may give your home the bump it needs.
If you’re hoping to see your home’s market value increase by less than $5,000, the above home renovation projects might just do the trick. However, if you’re really looking to see just how seller-oriented this seller’s market can be, you might be surprised by how much of a return you can see on larger remodeling projects.
Some of these improvements are obvious — adding extra rooms and finishing a basement space — while others may surprise you (spoiler: you might lose money on a home theater.) At the end of the day: Bedrooms, bathrooms, and overall square footage are the primary factors that influence appraisal value, and adding these to an existing space will have the greatest influence on its value. An additional bedroom may raise your home’s value by $20,000. However, when you account for this renovation’s average ROI (a meager 53%), you may question whether it is worth it.
With that said, these averages are not absolutes. For example: Swimming pools may prove to be more of a liability than an asset in some markets, but they can give your home’s value a massive boost under the right conditions.3 Keep this in mind when exploring how to increase the value of your home.
As we have discussed above, maximizing your ROI is the name of the home renovation game. If you’re wondering how to increase the value of your home while also recouping as much of your investment as possible, consider the below strategies.
The most influential factor in home value is the going rate for similar properties — but with property values sitting at an all-time high, there’s not much room to grow in this department. Overall square footage and the number of rooms, on the other hand, can be increased, and these factors similarly impact appraisal value. Significant additions to a property might be some of the most ambitious home renovations homeowners can take on, but the payoff may just be worth it.
How big of a payoff can an extra bedroom have? Up to 15% or as much as a $50,000 increase in overall property value. For many homeowners, this change is substantial enough to begin shopping for new homes on entirely new budgets. Of course, this comes at a price. Home additions can range from $20,000 to $80,000, which may exclude many homeowners from expanding their additional space.4
Bedrooms might be the most valuable in the eyes of buyers and appraisers alike, but usable space can be created in several other ways. Laundry room add-ons can be completed for less than $10,000 but can still give your home’s value the boost it needs. Similarly, less expensive renovations like finishing a previously unfinished basement or adding an attached garage can boost appraisal values by $22,000 and $7,000, respectively.
After swiping through your home’s online listing photos for days (or even weeks), its view from the curb will be the first thing prospective buyers will see. For this reason, a home’s curb appeal is majorly influential to its appraisal value — and is an area of opportunity when it comes to driving up the listing price. Curb appeal can account for up to 7% of a home’s sale price; factor in the relatively low cost of improving curb appeal, and you’re looking at some very favorable ROI.5
There are multiple paths toward better curb appeal. Something as simple as pressure washing your driveway and walkways can give your home a visual lift, as can replacing siding or throwing on a fresh coat of exterior paint. Unfortunately, there’s nothing you can do about your neighbor’s curb appeal, so get creative about giving your home a fresh look.
If you recall from earlier, the average return on investment for home renovations is 70% — making the 98.3% average ROI on an upgraded garage door that much more impressive. Moreover, this same survey of 100 American markets saw over 43 markets where a new garage door had an ROI at or above 100%. A new garage door might not have been your first thought when wondering how to increase home value, but it should definitely be near the top of your list.6
To take full advantage of this impressive ROI and give yourself the best chance at recouping your investment, you should opt for a well-insulated garage door and energy saving. A new garage door that is guaranteed to keep elements out (and utility bills down) will undoubtedly appeal to potential buyers and should give your home the boost in value it needs. Factor in the added curb appeal that comes from a brand-new, aesthetically-pleasing garage door, and this home renovation project becomes more than worth the investment.
As a rule of thumb: Renovations that can save (or make) potential buyers money in the long run have a great chance of raising a home’s value today. While some energy-saving upgrades can be made for less than $500, like installing a smart thermostat or switching to light dimmers, others can be well in excess of $20,000. The question, then, becomes whether these types of projects are worth it — and how to increase home value without losing money in the process.
One of the most common energy-saving upgrades homeowners will make is the switch to solar energy. By making this switch, homeowners can see their property value increase by over 4% in many parts of the country; with property values at an all-time high, this single-digit percentage is worth more than ever.7 Unfortunately, installing solar panels can cost a pretty penny. Depending on location and energy consumption, solar panels can cost anywhere from $15,000 to $25,000. Of course, there are federal and state tax incentives designed to offset the cost (and the sticker shock,) and your total tax rebate will determine just how favorable your ROI on this renovation is.8
If you’re looking for a more ambitious improvement than a smart thermostat but a near-$20,000 investment in solar is out of reach, there are several other ways to improve your home’s energy efficiency. Windows, for example, can account for up to 30% of a home’s heat loss or gain, and switching to insulated models can reduce utility bills by around $500 per window.9
When potential buyers tour a home for the first time, there are a few key features they’re looking for. Spacious laundry rooms, eat-in kitchens, and welcoming exterior lighting all top the list — but what buyers are really looking for is a place they can see themselves for years to come. Creating an environment where potential buyers can age comfortably will likely require making your property more accessible. Keep in mind, however, that extensive accessibility modifications can be difficult to reverse and therefore limit your pool of potential buyers. This includes things like raising countertops, installing entrance ramps, or lowering kitchen cabinets to put them within reach of wheelchair-bound residents.
But many additions — like widened doorways, levered faucets and door handles, and lipless door thresholds — will likely appeal to buyers of all age ranges while especially benefitting older buyers and those with limited mobility. Ultimately, minor improvements to your home’s accessibility will not only improve its value but also improve its livability should you decide not to sell but to age in place instead.
For many buyers, the kitchen can make or break a sale. Too small, and some buyers may feel like their dreams for a large family (and larger meals) may go unfulfilled; too dated, and potential buyers may be deterred by the cost of an imminent remodel. Needless to say, the kitchen presents one of the greatest opportunities to drive up your home’s value and should not be overlooked. How extensive your renovation will be, however, will depend largely on your budget.
In 2019, the average cost for a mid-range kitchen remodel sat at over $66,000; an “upscale” remodel soared to an eye-watering $131,510. Once you factor in the relatively low ROI of these projects — only around 52% — a budget-breaking remodel seems out of the cards entirely. Fortunately, there are ways to make your kitchen more appealing without opting for a full-scale renovation. A minor kitchen upgrade complete with a few upscale fixtures can have an ROI of nearly 80%. By giving your cabinets a fresh coat of paint, refreshing your appliances, and upgrading to a highly-coveted double sink, you can raise property value without emptying your pockets (and make almost all of your investment back.)
Home trends come in and out of fashion at a breakneck pace, and bathrooms are no exception. The 1960s had bubblegum pink tile and porcelain, the 1980s had eye-catching wallpaper, and the early 2000s had ultra-clean white tiles and blinding fluorescent lights. Because these trends change like the tides, many homeowners decide to skip out on renovations — and the result is a bathroom that can double as a time machine. Considering the average ROI on a bathroom remodel is over 70%, however, this is a worthwhile investment for homeowners wondering how to increase home value.
Like a minor kitchen remodel, opting for an upscale remodel over a mid-range one will likely have diminishing returns. Higher-end remodels drop your ROI to 56%, and a standard remodel sprinkled with luxury touches will help you get the most bang for your buck. Looking for value that will last? Skip the bandwagon, forget about the trends, and opt for a design that is clean, timeless, and serene.
Other tips:
Before trying these tips, you must first learn how to determine home value. This is important, so you don’t overspend. You should also learn to distinguish appraised value vs market value if you’re looking to sell your home.
Each property is different, so the home improvement project you choose could vary. However, any of these changes are beneficial when trying to attract a potential buyer. Given the current state of the housing market, your home may command a record-breaking sale price even without the above improvements. However, by taking on any of the home improvement projects listed here, you can allow your home’s value to soar to new heights — and if your budget allows, it may be worth taking on one or more of these projects. Whether you’re looking to capitalize on the white-hot housing market by selling or driving up your home equity to put your investment to good use, the above renovation tips will help you add value to your home while getting the best return on your investment.
For more advice on making the most of your investment, or to learn more about accessing your home equity through Truehold’s Sale-Leaseback, request your Info Kit today.
Sources:
1. National Association of Realtors. December 2021 REALTORS® Confidence Index Survey: Fewer Buyers Waiving Appraisal, Inspection Contract Contingencies. https://www.nar.realtor/blogs/economists-outlook/december-2021-realtors-confidence-index-survey-fewer-buyers-waiving-appraisal-inspection-contract
2. Renofi. Which home renovations have the best ROI (return on investment)? https://www.renofi.com/learn/renovation-best-return-on-investment/
3. Opendoor. Top improvements that increase home value based on market data. https://www.opendoor.com/w/blog/improvements-that-increase-home-value
4. Home Advisor. How Much Does A Home Addition Cost? https://www.homeadvisor.com/cost/additions-and-remodels/build-an-addition/
5. Springer Link. Valuing Curb Appeal. https://link.springer.com/article/10.1007/s11146-019-09713-z
6. Remodelings. Key Trends in the 2018 Cost vs. Value Report.https://www.remodeling.hw.net/cost-vs-value/2018/key-trends-in-the-2018-cost-vs-value-report
7. Zillow. Homes With Solar Panels Sell for 4.1% More. https://www.zillow.com/research/solar-panels-house-sell-more-23798/
8. Center for Sustainable Energy. How much does a typical residential solar electric system cost? https://sites.energycenter.org/solar/homeowners/cost
9. Office of Energy Efficiency & Renewable Energy. Why Energy Efficiency Upgrades. https://www.energy.gov/eere/why-energy-efficiency-upgrades
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