Step 1: Get a Value Wizard report for your property:
Step 2: Home improvements to increase value
There are two reasons for pursuing home improvement projects:
- Just Want To Do It — You want some new features in a home to improve your family's quality of life, but you don't want to leave your current home.
- Really Need To Do It — You want to make your home more marketable to maximize return (or minimize loss) and speed up the sale process.
In the right market conditions, a project might fit into both categories. Othertimes, though, the two approaches will conflict:Just Want To Do It — In situation A, the project is perceived as a necessary or worthwhile improvementto your family's lifestyle. Say you have two or three teenagers in the family andthe morning bathroom situation is completely out of control. It doesn't matter ifan additional bath generates a 150 percent return on investment or actuallydecreases the value of the home (unlikely, unless you're a completely incompetentdo-it-yourselfer with a bizarre design sense). The economic impact just doesn'tmatter. If you have the money for a new bath and you don't want to move — you addthe bath. It's that simple.
Or say you're a barbecue fiend and the only feature missing from the dream homeyou've just purchased is a sprawling backyard patio with a natural-gas grillcustom-built with flagstone and river rock. Again, return on investment justisn't going to be a critical question. The improvement becomes more comparable topurchasing a depreciating asset that you feel is a necessity for your lifestyle —such as an automobile. When the barbecue aficionado adds a deluxe patio to a homethat's already the most expensive property in the neighborhood — perhapsdestroying the entire backyard in the process — there's a good chance that verylittle of the cost will be recouped in a subsequent sale.
An even better example might be a pool. If you're a person who simply has to haveone — fine. Put in a pool. But it's probably worth checking with a real estateprofessional first, just to make sure you fully understand that adding the poolmight actually lessen the property's value and make it more difficult to sellshould you later decide to move. That's the reality in many markets. That doesn'tnecessarily mean you shouldn't do it, especially if you're planning to live inthe home for the rest of your life. It just means it's worth knowing the cost andsalability impacts at the front end — even if they're not going to deter you frompursuing the project.Really Need To Do It — The "type-B" home improvement project is pursued primarily to increase theproperty's salability. In turn, this often increases your return on investment. Agood real estate agent can advise you of possible improvements that will attractmore potential buyers and also pay for themselves either through increasing thehome's value or through shortening the time it takes to sell the home.
Here we're typically talking about projects such as: painting — either becausethe existing paint is in bad shape or is an unusual color; replacing carpets —again because of age, color or style; repairing or resurfacing a cracked drivewayor sidewalk; refacing kitchen cabinets; and trimming or removing overgrown orunattractive landscaping.
While spending several thousand dollars on your home right before you sell itmight not sound very appealing, it's not uncommon for the right work to more thanpay for itself in a higher selling price and shorter marketing time.
Consult with an experienced real estate agent to learn what improvements willmake your home more marketable in comparison to similar properties that are now —or recently have been — on the market in your area.