As spring approaches, many home owners are entertaining the idea of becoming home sellers… and many of those owners want to spruce up their home to enhance the property’s marketability.
The question is: what projects will yield the highest return-on-investment (ROI)?
The old saying is that bathrooms and kitchens tend to be the place to invest… “they sell houses”. But does that platitude bear up under examination? To be sure, if your kitchen cabinets do not function as they should, or one of your bathtubs has become discolored, then those projects might take priority.
Other than undertaking a renovation due to necessity, how else should you proceed?
According to Remodeling Magazine, over the last year, the highest ROI has been earned on projects that enhance the curb appeal of your home. According to the magazine, four of the five highest-yielding projects are directly related to these projects – with the lone exception being a minor kitchen remodel:
- Adding manufactured stone veneer to the front of the house (97.1% ROI)
- Entry door replacement, with a steel door (91.3% ROI)
- Deck addition, with a wooden deck (82.8% ROI)
- Minor kitchen remodel (81.1% ROI)
- Vinyl siding replacement (76.7% ROI)
The magazine breaks down its ROI estimates by region… the New England region is located here.
It is arguable that some of the numbers they provide are skewed high. But, in relative terms, it appears in a Seller’s market such as we currently have, the imperative appears to be getting buyers INTO your house, then letting the remainder of the house sell itself.
Which investments provide the lowest ROI?
Backyard patios. In-ground pools. Luxury rooms (wine cellars, saunas). Luxury products (hardie board).
Everyone loves a backyard patio, but tastes differ from family to family and person to person. Most people are not going to be willing to pay an extra $50,000 to buy YOUR patio… they will want to design their own patio and select their own materials and colors.
In-ground pools cost $40,000+ to install. They can cost $2,000/yr to operate (chemicals, electricity). They increase the cost of your homeowners insurance. And, if you have children / grandchildren, they pose a safety risk.
Luxury rooms and luxury products can add significant cost to the asking price. But, unless you are in a luxury housing market, do you know a lot of people who really need a wine cellar (my wife and I tend to have eight to ten bottles of wine on hand at any time) or who will pay an extra $20,000 because you used hardie board when building your home?
All of these remodels/renovations are very personal. They may have great value to you, and maybe to a few others, but will most often not garner you much in terms of ROI.
Again, remodels or renovations that are necessary should trump all other considerations. Otherwise, the trend seems to suggest your money is best spent in curb-appeal projects for 2018.