Before you start counting the additional profits you’ll make from these modifications, you’d be wise to speak with a real estate professional who is familiar with your neighborhood and surrounding area.
In a hot real estate market, buyers may be willing to overlook cosmetic shortcomings. They recognize that they can make their own changes to suit their lifestyle needs as long as they can get into a the right home in the neighborhood they want.
However, during cyclically slow conditions such as during the winter months and around the holidays, the right modifications could make the difference in how quickly your home moves or the price you will get.
If you are considering investing in home improvements it’s important to focus on the upgrades that hold real value to prospective buyers.
There are two categories for consideration when it comes to home improvements that pay off: structural and cosmetic.
Structural improvements are the most critical. You should objectively assess the condition of your roof, basement, water heater and furnace, windows and foundation to ensure that there are no defects or deterioration that would lead to costly repair demands when the buyer conducts the property inspection. You should also make any necessary repairs to your electrical and plumbing systems to ensure those in good working order.
Structural enhancements that can pay dividends are often tied to expanding a home’s functionality or space appeal. Adding a bedroom or bathroom to a smaller, less practical floor plan can make the difference in a property’s marketability.
If you’re looking for ways to add on, consider turning an attic or basement into an extra bedroom or bonus room/office. According to HGTV, this is one of the top home updates that can pay off when eventually selling a property.
Bathrooms are where you can make the most noticeable improvements. Consider skylights, glass block windows, vaulted ceilings, double sinks, luxury tubs and roomy showers. Stick with clean, neutral color schemes such as white tile and beige or muted toned walls.
Kitchens are often viewed as the centerpiece of the home because that is where many families spend much of their time. Today’s homebuyers are looking for kitchens that are modern and light, with features such as farm sinks and functional cooking islands, as well as spacious pantries.
Energy efficiency upgrades are desirable but they are not usually a place where you will make extra money on the sale. Quality appliances including wine coolers and sub-zero refrigerators, ceramic tile backsplashes, under cabinet lighting and updated cabinets, however, are considered a smart investment.
A key consideration to keep in mind is that any renovations you do should fit the style and scale of the home, and you should not skimp on the quality of the work. For example, if you have a Spanish-style home, you don’t want to install modern cabinetry. And if you are putting in new floors or appliances, make sure that they are an upgrade to the existing versions.
Don’t overlook the exterior of your home and the power of curb appeal. How does your home present to a prospective buyer driving by or approaching the home? Invest your dollars in things like landscaping, fresh paint and new windows.
Personal preference vs. smart investment
On the other end of the spectrum, what are the renovations in which you will not recoup your investment?
Pools are the most common addition that rarely pays off. Buyers often see them as an added expense because of maintenance, and those with children will feel the need to add costly fencing and other security measures to enclose the area.
Gazebos, wine cellars, tennis courts and other high-end enhancements are typically personal additions that homeowners choose for their own lifestyle and prospective buyers rarely share those passions or preferences.
It’s important to strike a balance in creating the home you want to live in now with the notion that you may sell the home later and your additions or enhancements may not pay any return on your investment.
Before you jump into a costly renovation, you’d be wise to speak with a real professional. Realtors have access to high end modeling tools and will be able to help you see if the modifications you’re considering will translate into additional sale profits.
Michael Blower is president of the Central Valley Association of Realtors and an agent with Grupe Real Estate. You can reach him at [email protected]