The best home improvements for resale value in 2020.
Choosing a home improvement project doesn’t seem hard, right? Decide which fixes add the most value for resale, and hire a contractor.
But most projects actually lose money. True story.
If you have enough cash to cover a full remodel you’re in a unique class. Most homeowners need a bank loan and end up paying interest rates as low as 6% and as high as 36% — your rate depends on your credit score.
Best Home Improvements for Resale
Below is Remodeling Magazine’s list of home improvements for resale value in 2020.
Remodeling is usually not a profitable for resale. Increased labor and material costs have lowered ROI across the board – in many cases, you will be lucky to break-even on a home improvement project.
For their top ten list they compared the average cost for 22 remodeling projects vs. home resale value.
#1. Manufactured stone veneer
- Avg. job cost: $9,357
- Avg. resale value: $8,943
- Cost recouped: 95.6 percent
#2. Garage door replacement
- Avg. job cost: $3,695
- Avg. resale value: $3,491
- Cost recouped: 94.5 percent
#3. Minor kitchen remodel
- Avg. job cost: $23,452
- Avg. resale value: $18,206
- Cost recouped: 77.6 percent
#4. Siding replacement (fiber cement)
- Avg. job cost: $17,008
- Avg. resale value: $13,195
- Cost recouped: 77.6 percent
#5. Siding replacement (vinyl)
- Avg. job cost: $14,359
- Avg. resale value: $10,731
- Cost recouped: 74.7 percent
#6. Window replacement (vinyl)
- Avg. job cost: $17,641
- Avg. resale value: $12,761
- Cost recouped: 72.3 percent
#7. Deck addition (wood)
- Avg. job cost: $14,360
- Avg. resale value: $10,355
- Cost recouped: 72.1 percent
#8. Window replacement (wood)
- Avg. job cost: $21,495
- Avg. resale value: $14,804
- Cost recouped: 68.9 percent
#9. Entry door replacement (steel)
- Avg. job cost: $1,881
- Avg. resale value: $1,294
- Cost recouped: 68.8 percent
Most common home improvement mistakes
- Under-estimating install costs
- Over-estimating the value of new or upgraded appliances
- Unexpected expenses
According to Ryan at MortgageWiki:
the average cost for a home remodel in 2020 is nearly $47,000. The typical range for a remodel is between $18,000 – $75,000.”
Even though some home improvements high yield, it will depend on the comparative home in the area.In real estate a comparative (or comp), is a home similar in size and condition, and sold in the last 60-days.
Below we provide some insight and guidance on you can prioritize home improvements for resale value.
Resale value is the goal
Most home improvement costs will fall into two categories.
1. Required expenses
- Electrical fixes, plumbing, installing or repairing fences, structural changes, home inspection costs
2. Value added improvements
- Kitchen and bathroom remodels are the most common. Other home improvements include repainting the inside or outside, changing the wallpaper, upgrading the floors or adding carpeting.
Home Improvement Scenarios
If you live in a family-oriented area a remodel may include adding a playroom or “mud room” near the garage door. This is obviously an expensive cost, but it might pay-off in the long run.
On the other hand, adding a sunroom has poor long-term payoffs, and if your home renovation is too extravagant it can push your home market value above the neighborhood average. In this case you can end up losing money. A good rule-of-thumb is that the higher the cost of remodeling, the more time you should spend to research and estimate prices.
According to Remodeling Magazine, a high-end siding replacement is a lucrative, yet inexpensive way to increase your home’s purchase price. On average, the return-on-investment is 76.7-percent (after closing).
Questions to ask yourself before remodeling:
- For comps sold within the last 6-months, what remodels did they do?
- How much of the total budget do you estimate each project will cost?
- Does each project appeal to most of your potential buyers? (ex: a skylight may not)
- Is there enough cushion in case projects run over-budget?
Factors affecting home value
You are probably asking – Which home improvements will give me the biggest return after I sell my house.
Pro Tip: Find out which homes like yours aren’t selling. How long have they been sitting on the market? Is it the price, or is another reason that makes it less attractive to home buyers?
Here are two biggest factors that affect resale value:
#1. Location, location, location
Of all the factors that decide a home’s value, its location might take the cake. Did you know that where your property is located can affect the value of your home improvements? Some upgrades are popular in one region of the country vs. another region.
For example, a large in-ground swimming pool adds a lot more value in Florida vs. Wisconsin. In fact, the three most popular locations for residences with pools are California, Florida and Arizona. On average in-ground pools increase a home’s market value by about 7.7%.
#2. State of the market
Like home mortgages, whether or not you choose to remodel may depend on the current rates set by the Federal Open Market Committee (FOMC). They meet eight times per year and set the index-rate for short and long-term mortgage loans.