Within the last ten years, home renovation projects have been on the rise. According to a recent survey, a surprising 9 out of 10 Americans plan to renovate their home in the near future. Home renovation projects are an excellent way to update and improve a home’s features while adding tremendous value to a home at resale. However, before deciding on a renovation project, it is imperative that homeowners first recognize which renovation projects will offer the greatest return and improve their home’s asking price.
For the past decade, Jason Cohen of Nexus Real Estate has remained one of the top real estate investors in the Pittsburgh-area thanks to his ability to evaluate potential properties and develop value-add strategic renovations. With his extensive experience in value-add renovations, Jason Cohen of Nexus Real Estate is uniquely qualified to speak on the most beneficial renovations for improving a home’s value. Below, Jason Cohen of Nexus Real Estate will share with readers the most highly-recommended renovations, how they can improve a home’s value, and what returns homeowners can expect from their improvements.
Improve Outdoor Features and Curb Appeal
While the saying may go, “don’t judge a book by its cover,” unfortunately, the same cannot be said for homes. The exterior condition of a home is the first impression a potential buyer has of a home and can sway a potential sale. In one 2019 Homelight survey, 76% of real estate agents agreed that curb appeal is the number one project that will improve a home’s marketability, with 94% saying curb appeal will significantly boost a home’s value.
When a buyer drives up to a potential property and sees peeling paint, cracked sidewalks, and a garage in poor condition, their first thought is often that the home’s interior must be in poor condition as well. When viewers go inside the house, they will look immediately for other imperfections instead of appreciating the home’s overall layout and updated features.
For this reason, experts often say landscaping and exterior renovations add the most value to a home when it comes time to sell. When improving a home’s garden, deck, and walkways, homeowners can expect to recover an estimated 267% of their costs when the home sells. In fact, 17% of realtors in a 2018 survey stated that a recent landscape maintenance project resulted in the sale of a home. While homeowners may be put off by the high costs of landscaping, as mowing, pruning, and installing mulch and plants in a 2,800 square foot yard will often cost well over $3,000, homeowners can expect to see a 100% return on their investment.
However, while improved landscaping will often make the most significant difference for prospective buyers, many homeowners overlook the importance of an updated new front door. While a new front door may cost a homeowner $500, it could add an additional $5,000 to a home’s selling price! Meaning a new front door is the only renovation where homeowners will see a 1000% return!
When most people think of improving their home’s value through renovation, they think of updating a kitchen. However, while kitchen renovations are common for families looking to sell their homes, their ability to add value is often exaggerated. According to the National Association of the Remodeling Industry’s 2019 remodeling impact report, realtors estimate that homeowners can expect to recover just over 50% of their kitchen renovation costs during their home’s sale. However, while kitchen renovations may not add tremendous value to a home, these renovations have been shown to greatly improve a home’s marketability. One study found that 80% of buyers consider a newly finished kitchen as a major influence on their purchasing decision. Before pursuing a kitchen remodel, homeowners should know:
- The real estate industry’s standard ROI for a mid-size kitchen renovation is typically between 50 to 60 percent of an overall budget for remodeling.
- The location of a property will impact a kitchen renovation’s ROI. While the Pacific homeowners may see 90% of their total costs recouped, homeowners in other parts of the country may only see 68%.
- A smaller kitchen renovation’s ROI is typically much higher, often between 75% to 80%.
Finish the Basement
According to a variety of NAHB studies, high-income buyers, or those making more than $150,000 per year, prefer homes with basements. A basement adds a significant amount of heated square footage, meaning a basement can easily bump a home’s price into a higher bracket regardless of whether it is finished or not. In fact, Georgia homes that have an unfinished basement will often go for an additional $15,000 to $20,000, with finished basements adding $40,000 to $50,000 to the property’s asking price.
As the typical finished basement can run a homeowner between $19,000 to $34,000, the rate of return will vary greatly depending on the home’s location. However, on average, American homeowners can expect to recoup up to 70% of the renovation cost during their home’s sale. As finishing a basement can require a variety of complications ranging from waterproofing to permits, homeowners are encouraged to thoroughly research the pros and cons of basement renovations before moving forward with a contractor.