The look and feel of a home are everything to a prospective buyer. It should then come as no surprise that the big returns on investment encompass some very specific remodel items. While many believe there is a huge list of home improvement projects that increase their home’s value. Sellers will be shocked to hear that there are actually very few and the return is not as great as one might hope.
First, let me be clear, there is no magic formula to selling a home. Every home is different and has different needs or things that should be done to improve marketability. Statistically though there are very few things that impact the actual purchase price directly. Those remodel items that do show value increases are typically very small in the big scheme of things. Almost all of them have to do with first impressions. This should come as no surprise. Most buyers make their decision to even consider a property at the speed of their mobile device.
Cost vs Value
That being said, the only remodels that produce a return on investment of 80% or more recovery price according to the Remodeling Cost vs Value Report (www.costvsvalue.com) were smaller projects or minor updates. Large home improvement projects do tended to still provide a return on investment. Compared to cost though most did not give sellers back their expense over 5-10 years.
According to CostvsValue.com the top items in the small project category in Nashville to get return on investment were attic insulation, garage door replacement, manufactured stone veneer, and entry door replacement. These had average returns on investment from 83% to 123%. Attic insulation being the biggest winner with a 123% ROI followed by 101% for garage door, 94% for stone, and 83% for entry door. These small projects were all under or near $5,000 and could prove excellent investments for your home sale.
For those who might be looking to make a larger investment in their home there are other alternatives. Considering the strength of the seller these investments might be a great option if you don’t have to sell, but would be willing to at the right price. We consider the higher price points of much greater than $5,000 to be items that would add long term value and give a return, but should be considered only if you are not in a rush to sell. The top three improvements getting the greatest return well over $5,000 in the Nashville area include the following.
A minor kitchen remodel produces good returns. With estimated costs averaging $19,312 and average returns on cost of $19,256 (99% return) it will return its cost. Minor kitchen remodels are updates to functional but dated 200-square-foot kitchens with 30 linear feet of cabinetry and counter tops. They further explain it implies leaving cabinet boxes in place but replacing fronts with new raised panel wood doors/drawers and new hardware. These improvements also include upgraded energy efficient wall ovens, cook tops, and slide-in refrigerators. Replacing laminate counter tops, installing mid priced sinks/faucets, repainting trim, adding wall covering, and removing/replacing with resilient flooring were all part of typical remodels. The return for a minor kitchen remodel was the highest of all by far of the large dollar projects at a return of at cost.
Coming in a distant second, third, and fourth for large resale value projects were window replacements, siding replacements, and roofing replacement. We consider these projects to be deal breaker projects. These projects all came in at returns on cost of high 70% to low 80% range. Due to the losses we don’t recommend these projects unless they are a dire need situation. Do you have windows outdated? Does your siding look real bad? Do you need to replace dramatically discolored roofing? If the answers to these are no then don’t do it. Ranging from $13,000 to $19,000 in cost you need to consider its impact on the sale. At even just $13,000 you will end up taking a loss of nearly $3,000 on your cost for the project at a 80% return.
As for larger projects, we did not consider any projects over $50,000. With an 83% return on investment high over $50,000, we felt like large dollar projects were not worth it. Our sellers would not be able to recoup a $10,000 or more loss quickly enough if looking to sell in the next 5 to 10 years. We are not discouraging these kinds of projects, but would consider those as long term stay in the home type projects.
Ultimately home improvements can be a benefit to making the home sell, but don’t look for huge gains and be very selective on your projects. Targeting small improvements like insulation, garage doors, stone veneer, and entry doors are great talking points for potential buyer. These are items the buyer can actually see. Improvements they can see will bring your home to the top of their list. Remember also that an outdated kitchen with a minor remodel can give a boost. Everyone wants to cook in a new kitchen. The big take away though is that spending larger amounts doesn’t give quick return.
If you are considering a sale in the greater Nashville area call us at Real Estate Works. We would love to help you get the best price for your home.