What do a custom designed swimming pool with a swim- up bar, an in-home movie theater decked out with the latest and greatest technology, and a large detached four car garage have in common? These are all projects in your home that may not produce the greatest return on investment (ROI) when going to sell your home later. Sure, you absolutely LOVE your Olympic-sized swimming pool, but that doesn’t mean that other buyers will. Oftentimes homeowners mistakenly think that adding $10,000 in upgrades will result in a direct $10,000 increase in the sales price of their home. This is very rare. What follows is a list of projects that according to Realtor.com have been known to have the greatest ROI.
1) A new deck
A great patio, deck, or screened in porch can add appeal for potential buyers. Sprucing up your outdoor living space with comfy chairs, rugs, and decorative pieces creates a warm and inviting atmosphere and allows potential buyers to imagine themselves enjoying the space for years to come. If you already have an existing patio or deck and are considering screening it in, I would recommend only doing so if you are doing it for yourself and not because you want to make more money when you sell your home. Screened in porches are a great bonus, but not necessarily a requirement for many of my clients. Also note that any outdoor living space cannot be added as additional square footage unless it is heated and cooled.
2) A finished basement
A finished basement, meaning one that is completed to the same quality as the rest of the home (drywall, flooring, heating/air, etc.), can add great value to your home and create more space for that “man cave”, playroom, or guest/in-law suite. Typically a walkout basement like the one pictured above with exterior access brings a higher ROI than the alternative. It’s important to know that unfinished basements and partially finished basements (plumbed in, walls studded, etc.) will not create as much value as a finished basement. Regardless of whether your basement is unfinished, partially finished, or finished, an appraiser will not give the same price per square foot for the basement square footage as the rest of the home. For example, if the above grade square footage is going for $99 per square foot, you may only receive a third of that, or $33 per square foot for the basement square footage.
3) A new front door
When potential buyers come to tour your home, it is imperative that the front door makes a great impression. After seeing the landscaping and front yard (make sure your grass is cut!), they will then head to the front door. It may sound silly, but make sure the door handles are working properly. I’ve been to showing appointments where it has taken me several minutes to open the door because the key gets stuck or the lock is difficult to turn! I’ve even showed a home where the key in the lockbox didn’t open the front door. The homeowner showed up a couple minutes after we pulled up and let us in (talk about awkward!). Besides making sure the keys and locks are up-to-date, make sure your front porch and door are presentable. A fresh coat of paint, some flowers, and a new welcome mat can make a world of difference to buyer’s first impressions!
4) Attic insulation
This is an improvement that buyers won’t necessarily see, but will be beneficial for you while you are still living in your home. Adding insulation in your attic and in your crawl space can help you save money on your electric bill. If your home is for sale and you have proof (your electricity statement) showing that you are saving more money per month, why not include that in the documents that your REALTOR® uploads on the Multiple Listing Service (MLS)? Tell your REALTOR® about all of your home projects and improvements (no matter how small), because it could be an added incentive for buyers!
5) Planting a tree
This improvement may take years to pay off, but once you have a huge, shady tree in your front or backyards, buyers will take notice. Having a shady spot to swing on a hammock and relax is a picture-perfect opportunity for showcasing the livability of your home. Not only does a mature tree create a nice aesthetic value, it can also help you save money on electricity. Depending on your houses location and the direction the sun rises, you can plant the tree so that when it is full grown it helps to block some of that sunlight from entering your home and causing it to heat up. Trees are not only beautiful, but they can save you money down the road!
I’ve talked about projects that increase your return on investment, but what are some projects that you think wouldn’t be as beneficial for your ROI? Comment below with what you think!