With home prices and buyer demand on the rise, it’s smart for any homeowner to consider remodeling at least one part of their house to boost their asking price. However, any real estate professional can tell clients one simple truth: There’s a right and a wrong way to approach this issue. And a lot of it is tied up in return on investment.
For example, some owners might think it’s wise to put thousands of dollars into renovating a bathroom, but if it’s only going to come with a marginal increase in asking price, then it might not be worth it to them. With this in mind, there’s plenty of data to suggest which investments are going to pay off the most, according to Remodeling Magazine. The good news is that the value of these investments is on the rise thanks to the generally improving housing market.
Going less traditional
While many people may see redoing a bathroom or kitchen as the fastest and most obvious way to get more ROI for their remodeling buck, that might not actually be the case, the report said. Something as simple as putting new insulation into a home can provide owners with an additional in property value of $116.90 above every $100 they spend.
More traditional remodel efforts, like installing stone countertops, replacing garage doors and installing new steel doors also made the list of the biggest ROI last year, the report said. However, it’s worth noting that a number of “green” remodel efforts, including installing new installation, are moving up the list as consumer demands change.
“I think over time that really starts to loosen up prices a bit and allows some of these [remodeling] factors to become more significant as part of the price,” Jonathan Diehart, director of custom services and published research at Metrostudy, told Remodeling. “When times become more difficult, the price becomes competitive. When times are better, the price bands get bigger [on homes of equal size]. It’s no longer ‘It’s a 2,500-square-foot house so it should cost this,’ but rather ‘It’s a 2,500-square-foot house that has this and this.'”
What makes a good ROI remodel?
There are a number of common factors seen across all the things that tend to top the remodel ROI list on a regular basis, according to House Logic. For example, these projects tend to be low-maintenance going forward, implying shoppers want a kind of set-it-and-forget-it attitude toward such efforts. Likewise, homeowners don’t necessarily have to invest in the highest-quality items as part of their remodels, and certainly shouldn’t break the bank to undertake them. Finally, because energy efficiency is becoming so sought-after, it might be wise for owners to consider the ways in which they can improve their homes’ ability to reduce consumption of heat, water or energy.
Often, it’s wise for owners to consult with industry professionals before making any decision on a remodel, especially if they want to undertake these efforts just ahead of real estate sales. This is where an agent’s experience can really go a long way toward helping current owners boost their ROI in short order.
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