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In the hot residential real estate markets, many homeowners enjoy significant property appreciation. But while a rising tide could blow all ships, you can also increase the value of your home more proactively than average, which helps if you are looking to sell your home or refinance your mortgage.
We’ll show you some of the most important ways to add value to your home. Remember, however, that the options should be filtered based on your budget, current market trends, and your local housing market.
Why are you trying to add value to your home?
Before you start any home improvement project, ask yourself about your motivation with the following question:
- Do you then want to bring your home onto the market and would like to attract as many interested parties as possible at the highest price?
- Is it a quick sale that only requires cosmetic renovations?
- Would you like to refinance your mortgage to lower your interest rates and monthly payments?
- Or are you just trying to build more equity in your home with no intention of selling anytime soon?
These are important questions to answer in order to determine how much you should be spending upfront to add to the value of your home and whether it will be worth it in the long run.
Ways to add value to your home
At the same time as setting your budget, make a list of home renovations. This makes it clear how much money you really need and whether you can pay for it yourself or whether you need financing. Here are some popular ways to add value to your home.
New coat of paint
A new coat of paint can freshen up and make your home more attractive in no time. Realtors recommend using warm neutral colors like beige, tan, or gray. Additionally, cool neutral colors can help make smaller rooms look bigger. The average cost to paint a 400 square foot room is $ 1,000 for a professional job, although it can cost a lot less if you do it yourself.
The exterior of your home may need an update as well as it is exposed to the elements all year round, which can cause chipping, cracking, or peeling. A good power wash and paint job goes a long way towards making the home look new.
Increase your appeal to curbs
The exterior of your home is the first thing potential buyers will see. So when you invest in your curb appeal (alongside repainting) you increase your chances of grabbing a buyer’s attention and generating a lot of interest that would result in a more expensive sale.
Options include planting brightly colored flowers in your front yard (or hiring a professional landscaper) to replace the front door, garage door, siding, and windows of the house.
Keep in mind that these projects can easily go from a few thousand to tens of thousands. Therefore, it is important to determine which project will provide your home with the most value for your dollars spent on upgrades.
Related: 12 Impactful Home Renovations Under $ 5,000
Update the bathroom
Bathrooms are one of the most critical rooms in a home. If your bathroom is more than 10 years old, a facelift is necessary if you want to make your home more attractive to prospective buyers or sell at a higher price.
Upgrades like a fresh coat of paint; Replacement of cabinets, faucets, shower heads and countertop; or installing a new sink or tile can go a long way. You can do many of these ideas yourself for a few hundred dollars.
But if the bathroom needs a major renovation – or you’d prefer to leave the plumbing to the professionals – a full renovation can cost around $ 10,000 on average.
Renovate your kitchen
The kitchen is another room that has a high priority in the buyer’s hierarchy of needs. An attractive kitchen increases the value of your home significantly.
You can remove non-load-bearing walls to give it a more open look, install a kitchen island, replace old appliances with new stainless steel models, update the back wall, repaint or replace cabinets, or install granite countertops.
Before starting any kitchen remodeling project, speak to an interior designer or real estate professional to learn what features will help your home sell or increase in value. They will also be able to tell you which kitchen trends customers are currently favoring and which they are willing to pay more for. This way you can avoid wasting your money.
Make the house energy efficient
Energy efficient home improvement can lead to higher home value, according to a study by Freddie Mac.
Freddie’s results show that installations like energy efficient appliances, light bulbs, windows and solar panels add value that leads to the house being sold at higher prices. The value is derived from the energy efficiency features and energy savings that give homeowners more disposable income to pay their monthly mortgage payments.
“In other words, energy-efficient homes could have a higher collateral value and place less of a financial burden on their owners,” said Freddie.
As always, think about cost before taking this route as these options can add up quickly.
Expand your square footage
Increasing the square footage of your home is another way to add value, although consulting with a professional will ensure that you are doing the right addition and getting the best return on investment.
The following options should be considered:
- Accessories housing unit: This can be additional living space on your property that has a bathroom, electricity, running water, a kitchenette and a sleeping area. This could be a garage or a shed that is being converted into a guest living room, an additional room for a large family, an office or a rental unit.
- Finished basement: If you convert your basement into a ready-made habitable living space for guests, as a lounge, fitness studio or office, you can significantly increase the value and attractiveness for prospective buyers.
- Finished attic: Just like the basement, converting your attic into a habitable space can add value to your home.
- Additional bedroom: The more bedrooms you have, the higher the price of the house. Depending on how much space you need, add one or more additional rooms that suit the preferences and trends in your local housing market.
- Bathroom accessory: The more bathrooms, the more attractive the property is, especially for families. An additional bathroom or toilet is worthwhile, especially if you only have one bathroom.
As always, there are pros and cons with these options. As you add more square footage, you will likely need to spend more time servicing and maintaining the property. Electricity bills can also rise with the expansion.
Let your budget guide you
In turn, your reasons for adding in value to your home should influence your budget and your decision to finance the home improvement. Selling quickly means spending very little time on major upgrades, maybe just a few fixtures and a paint job.
A normal home sale costs more as you may be doing major upgrades to get a buyer in while doing repairs as advised by your real estate agent, home inspector, or at the request of a serious buyer.
Take stock of your financial situation and avoid biting off more than your income can comfortably handle. Also, given the current low interest rate environment, consider cash out refinancing or a home loan. The IRS also allows certain deductions for these payments on any of these debts if the funds are used for home improvement.
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