Since the day I met my broker in charge, he has always tried to instill into me that there are 3 factors that determine a homes value. I can hear him saying it now, "Price, Location, and Condition." After just the little experience I have as a broker, I have to respectfully disagree with him. I believe there are 4!
Price, Location, Condition, and Kitchen. Yeah okay, maybe that wasn't that funny. For my lack of humor, I've compiled a list of the most cost effective ways to increase the value of your home to get the best return on your investment.
When a buyer walks into your home, one of the areas that's going to make a huge impact on their consideration of purchasing your home over another is the kitchen. On average, a full-gut kitchen renovation averages a 75% return rate (Invest $30,000 - Return On Investment = $22,500). To know what's going to be worth your time and money, we broke it down into individual updates so you can make the smartest investments.
1. Reface Your Cabinets
Cost Estimate: $2000 to $9000
Return on Investment: Roughly 80% of your investment (Invest $3,000 - Receive $2,400)
2. Add A Backsplash
Cost Estimate: $50 to $150 per square foot (installation costs not included)
Return on Investment: Homes with backsplashes typically sell for 4% above expected value
3. Upgrade That Old Sink
Cost Estimate: $100 to $800 (depending on style/material)
Return on Investment: Homes with a farmhouse sink typically sell for 8% above expected value
4. Replace The Countertops With Granite
Cost Estimate: $50 to $60/sq. ft.
Return on Investment: 20% - 30% of initial investment (Invest $5,000 - Receive $6,250)
5. Upgrade Appliances
Cost Estimate: $300 to $2,500 per appliance
Return on Investment: Pays off over time depending on usage and age of previous model
General Home Upgrades That Return The Most Value
6. Insulate Attic
Cost Estimate: Average Cost of $1200
Return on Investment: 20% more than initial investment (Invest $1,200 - Receive $1,440)
7. Replace Entry Door
Cost Estimate: Average Cost of $1100
Return on Investment: 97% of initial investment
8. Deck Addition
Cost Estimate: $15/sq. ft.
Return on Investment: 87% of initial investment
9. Install Efficient Windows
Cost Estimate: $400-$600 per window (including installation)
Return on Investment: 15% more than initial investment
10. $500 Rule
Anything that is outdated or damaged - things like old wallpaper, an outdated bathroom vanity, a broken door, or damaged tile floors - it's safe to assume that small issues like these will take $500 hits off the total home value. If an appraiser finds several of these problems, the result can be thousands in lost home value. As a rule of thumb, fix problems immediately that would cost less than $500 to fix. This way you will recover that cost in your appraisal.
One Very Important Thing To Remember!
Be sure not to overcapitalise! It's always our intentions to increase the value of our home, but it is possible that you could invest more than you can get out of your resale. A good way to not dig yourself into a hole is by starting with a home valuation to compare the value of your home to houses that have sold in your area to make sure you don't over-renovate.
If you would like to know the actual value of your home, you can get if for free HERE.
With all that being said, I'll leave you with this final guaranteed way to gain 2% more of your home's value when you sell. If you're like me, I want to make sure I get every penny of equity I've invested into my home when I'm ready to leave. If your home's worth $300,000, that's an extra $6,000 in your pocket! When you're ready to sell, remember this most rewarding tip!