Few homeowners are completely satisfied with the layout, décor or overall appearance of their homes. This often leads to big home renovation projects, many of which cost thousands of dollars to complete. As these homeowners spend their savings or take out additional mortgages to finance these improvements, they often begin to wonder whether the renovations will really increase the value of their homes or will simply take all their money.
While the average costs associated with remodeling have dropped 10-15 percent in the past few years, the overall selling prices for most homes has also decreased. This makes choosing renovations that will provide the most resale value even more important.
While small remodeling projects, such as replacing a worn front door or updating to energy efficient windows, still bring the highest returns, there are opportunities for larger renovations to improve a home’s value. These are the top four big-ticket home remodeling upgrades that retain the most resale value:
1. Kitchen Remodeling Projects
While gutting and completely rebuilding a kitchen is an expense that generally will not pay off for homeowners, a fairly minor kitchen re-do can add up to 83 percent to the home’s value. By simply updating a kitchen with new cabinet doors, newer appliances and high-quality countertops, sinks and hardware, homeowners can provide a new look to their kitchen for under 20,000 dollars. Potential buyers walk into these partially renovated spaces and assume that these changes cost between 40,000-50,000, and they are willing to pay more for the homes.
A good rule of thumb for kitchen remodeling projects is to budget and spend approximately 25 percent of the home’s value. Spending more than this will be putting too much capital into a home that will not be recouped at resale. Additionally, homeowners should be cautious about building ultramodern spaces in traditional homes. Potential buyers like to see updated fixtures, but they also want kitchens that match the style of the home’s architecture.
2. Bathroom Remodeling Projects
When potential buyers view a home, quality bathrooms are often their second-highest priority. Like renovated kitchens, remodeled bathrooms can look especially high-end, clean and luxurious. These qualities can entice many buyers to pay top-dollar for homes.
Remodeling a bathroom does not have to cost a lot either. Putting just 5,000-10,000 dollars into repainting, tiling and adding high-quality fixtures can truly transform a bathroom into a home oasis that will reap a 60 percent return on investment. Homeowners with multiple bathrooms should choose their remodeling projects carefully. Buyers like the idea of spa-like master suites, and updating guest powder rooms can also impress.
3. Basement Renovations
Completing an unfinished basement or renovating an out-of-date basement can add significant living space to a home that will be reflected in value at sale time. Because homeowners are simply utilizing space that already exists in their homes to create additional living quarters, remodeling a basement is a surefire way to increase the value of their homes. Unfinished basements that are renovated into fully functional living rooms, extra bedrooms or even man caves can bring a 70 percent financial return at resale time. Of course this dollar amount depends on the square footage of the basement, but even small spaces that are made livable will see financial gain.
4. Attic Conversions
Constructing an addition or expanding the roof or foundation is a costly renovation project that typically does not offer much in resale returns. However, homeowners that can fully renovate an interior space, such as an attic, spend less money and therefore make more profit when they sell. Because attics are typically used for storage and are then considered wasted space, renovating them to become usable living area can add significant value to homes. Most often these attics are converted into additional bedrooms, sometimes returning as much as 84 percent of the cost in resale value. Older homes are particularly appropriate for attic renovations since many of them have high rooflines that yield larger spaces under the eaves. These areas can become cozy bedrooms, libraries and bonus rooms.
While big-ticket renovations see the highest yields at resale, there are a number of smaller investments that often bring an even greater investment. Remodeling projects such as swapping out an entry door, adding a wood deck or updating a home’s siding typically cost even less than these projects but see more than 90 percent in resale returns. Homeowners who want to see value when it comes time to resell their homes need to carefully pick and choose their renovation projects.