The best home improvements for resale value in 2020.
Choosing home improvement projects doesn’t seem too difficult, right? Decide which fixes add the most value for your home, and then hire a contractor to do it. The problem is that mistakes can be very costly.
If you have enough cash to cover a home remodel you’re in a unique class. Most homeowners have to go to the bank for a loan, and interest rates will vary depending on your credit score.
First-time sellers are at an even greater disadvantage – their loan probably has a higher rate, and most first-time homeowners have trouble estimating labor costs, and unexpected expenses. I mean… imagine flipping a house for the first time?
Best Home Improvements to Increase Resale Value
Remodeling Magazine’s list of the best home improvements for resale value in 2020. For their top ten list they compared the average cost for 22 remodeling projects vs. home resale value.
FYI: Remodeling is usually not a profitable expense upon resale – increased labor and material costs have decreased the overall ROI most home improvement projects in 2020. And worse yet, the trends year-over-year confirm that ROI will continue to decline. In many cases, you will be lucky to break-even on a project.
#1. Manufactured stone veneer
- Average job cost: $9,357
- Average resale value: $8,943
- Cost recouped: 95.6 percent
#2. Garage door replacement
- Average job cost: $3,695
- Average resale value: $3,491
- Cost recouped: 94.5 percent
#3. Minor kitchen remodel
- Average job cost: $23,452
- Average resale value: $18,206
- Cost recouped: 77.6 percent
#4. Siding replacement (fiber cement)
- Average job cost: $17,008
- Average resale value: $13,195
- Cost recouped: 77.6 percent
#5. Siding replacement (vinyl)
- Average job cost: $14,359
- Average resale value: $10,731
- Cost recouped: 74.7 percent
#6. Window replacement (vinyl)
- Average job cost: $17,641
- Average resale value: $12,761
- Cost recouped: 72.3 percent
#7. Deck addition (wood)
- Average job cost: $14,360
- Average resale value: $10,355
- Cost recouped: 72.1 percent
#8. Window replacement (wood)
- Average job cost: $21,495
- Average resale value: $14,804
- Cost recouped: 68.9 percent
#9. Entry door replacement (steel)
- Average job cost: $1,881
- Average resale value: $1,294
- Cost recouped: 68.8 percent
#10. Deck addition (composite)
- Average job cost: $19,856
- Average resale value: $13,257
- Cost recouped: 66.8 percent
Most common home improvement mistakes
- Under-estimating install costs
- Over-estimating the value of new or upgraded appliances
- Unexpected expenses
According to HomeAdvisor, the average cost for a home remodel in 2020 is nearly $47,000. The typical range for a remodel is between $18,000 – $75,000.
Even though some home improvements high yield, it will depend on the comparative home in the area.In real estate a comparative (or comp), is a home similar in size and condition, and sold in the last 60-days.
Below we provide some insight and guidance on you can prioritize home improvements for resale value.
Resale value is the goal
Most home improvement costs will fall into two categories.
1. Required expenses
- Electrical fixes, plumbing, installing or repairing fences, structural changes, home inspection costs
2. Value added improvements
- Kitchen and bathroom remodels are the most common. Other home improvements include repainting the inside or outside, changing the wallpaper, upgrading the floors or adding carpeting.
Home Improvement Scenarios
If you live in a family-oriented area a remodel may include adding a playroom or “mud room” near the garage door. This is obviously an expensive cost, but it might pay-off in the long run.
On the other hand, adding a sunroom has poor long-term payoffs, and if your home renovation is too extravagant it can push your home market value above the neighborhood average. In this case you can end up losing money. A good rule-of-thumb is that the higher the cost of remodeling, the more time you should spend to research and estimate prices.
According to Remodeling Magazine, a high-end siding replacement is a lucrative, yet inexpensive way to increase your home’s purchase price. On average, the return-on-investment is 76.7-percent (after closing).
Questions to ask yourself before remodeling:
- For comps sold within the last 6-months, what remodels did they do?
- How much of the total budget do you estimate each project will cost?
- Does each project appeal to most of your potential buyers? (ex: a skylight may not)
- Is there enough cushion in case projects run over-budget?
Factors affecting home value
You are probably asking – Which home improvements will give me the biggest return after I sell my house.
Pro Tip: Find out which homes like yours aren’t selling. How long have they been sitting on the market? Is it the price, or is another reason that makes it less attractive to home buyers?
Here are two biggest factors that affect resale value:
#1. Location, location, location
Of all the factors that decide a home’s value, its location might take the cake. Did you know that where your property is located can affect the value of your home improvements? Some upgrades are popular in one region of the country vs. another region.
For example, a large in-ground swimming pool adds a lot more value in Florida vs. Wisconsin. In fact, the three most popular locations for residences with pools are California, Florida and Arizona. On average in-ground pools increase a home’s market value by about 7.7%.
#2. State of the market
Like home mortgages, whether or not you choose to remodel may depend on the current rates set by the Federal Open Market Committee (FOMC). They meet eight times per year and set the index-rate for short and long-term mortgage loans.