How to Increase Your Home's Value
There is really a sole reason to try to raise the value of your home: if you’re trying to put it in the market. If you’re not, deliberately increasing your home’s value most likely will raise your tax bill as well. There are approaches to raise your home’s value for resale that range from the very expensive (major remodels and augmentations) to free (cleaning up the front yard). We’ll look at the whole range, noting how much value is added when its conceivable.
Before you begin any of these undertakings, it is important that you do them with the following in mind: you do not want to increase the value of your property too far above others in the area. Why? Because people who want expensive homes will shop exclusively in higher-value neighborhoods. If you own the “best house” in the neighborhood, it is improbable you will recoup whatever investment you’ve made. A good rule of thumb: keep the value of your property within 15 to 20 percent of your neighbors’.
The following figures appeared in the November, 2001 issue of Realtor Magazine. They list the top ten remodeling projects undertaken to expand a home’s value in the United States and what percentage of your remodeling investment is recovered at resale.
Project (average cost recouped, national):
Minor kitchen remodel (88%)
Bathroom remodel (85%)
Major kitchen remodel (81%)
Family room addition (80%)
Deck addition (77%)
Master suite (75%)
Attic bedroom (74%)
Siding replacement (73%)
Window replacement (69%)
Home office (55%)
These are national averages, so in your vicinity, the figures may be lower or higher. To clarify, if you spend $10,000 on a minor kitchen remodel, you will be adding $8,800 to the value of your house. Remember that it’s a tricky business, trying to add value to your home. What seems to be value to you may not appear that way to any given forthcoming buyer.
Ventures that may increase your home’s value include: Jacuzzi (4 jets or more); permanent hot tub; in-ground pool with nice deck area; security system; sprinkler system; substantial out buildings such as a two-car garage or finished workshop; and vaulted or trey ceilings. Think twice about the following projects however, as they may not add value to your house: above-ground pool; ceiling fans; garden pond; and light fixtures.
Some tips when planning a value-increasing remodeling:
l Remodel with mass appeal in mind. Potential buyers are usually attracted more to neutral, standard design.
l Don’t go modest when it comes to construction. Utilize a durable, quality materials. If you’re a do-it-yourselfer, genuinely evaluate your ability to do it right.
l Don’t remodel in a different style from the rest of the house. Additions and upgrades that look “tacked on” may detract from a home’s appeal.
l Turning a bedroom into a restroom is a mistake – it reduces the number of bedrooms, a head offering point.
l Don’t do a $30,000 kitchen remodel in a $100,000 house – unless you plan to continue living there. It is a misuse of money.
l If you don’t sell, there are improvements that actually reduce your tax bill. Qualifying improvements are those that expand your home's value or prolong your home's life, including: a fence, driveway, a new room, addition, swimming pool, garage, porch or deck, built-in appliances, insulation, new heating/cooling systems, a new roof, landscaping, etc.
If you don’t have the kind of money it takes for even minor remodeling, there are low-cost ways to increase your home’s value. At the very least, the following things will make your home more appealing and welcoming to prospective buyers.
Ensure the outside of your home is spic-and-span. Clean out the gutters. Wash the windows and remove cobwebs and bugs. Trim the hedges, cut and edge the lawn, sweep the sidewalks and driveway. Plant some colorful flowers out front. The reason for these small things is straightforward: If two similar homes in the same are area are both for sale, the one with the cleanest and most appealing front yard will sell first.
You may want to add to or enhance your landscaping while you’re at it. According to a study conducted by Money Magazine, landscaping may be the best investment to raise a home's value. The study found that well-planned, attractive landscaping was estimated to have an actual recovery rate 100 to 200 percent higher than a kitchen or bathroom redesign.