5 Home Improvement Projects That May Have the Biggest Return on Investment
Conventional wisdom has long held that kitchens and baths sell homes. Those are also two of the more expensive areas to tackle for home improvement, but if you make sound design and material decisions, you could end up making your home more appealing to potential buyers — and a more enjoyable place for you to live.
A recent study from the National Association of Realtors(1) confirms that kitchens and baths still top the interior home renovation projects that appeal most to potential buyers. The survey ranked the projects’ likely value to the home for resale. These five home improvement projects can potentially provide the biggest bang for your buck for ROI.
1. Complete Kitchen Renovation
NARI Remodelers’ cost estimate for the project: $60,000 REALTORS® estimated cost recovered: $40,000 Percent of value recovered from the project: 67%
The look and feel of a kitchen can serve as shorthand for how up-to-date the owners have kept a house. Potential buyers have been known to rule out homes based on kitchens alone. Stainless steel appliances and granite countertops continue to be on many buyers’ checklists, especially those who want to move right in and start entertaining. The top reason for renovating a kitchen, cited by 36% of homeowners, was to upgrade worn out surfaces, finishes and materials. According to the Remodeling Impact Report, 12% of realtors said a completely renovated kitchen most recently helped them cinch a deal, resulting in a closed sale.
2. Kitchen Upgrade
NARI Remodelers’ cost estimate for the project: $30,000 REALTORS® estimated cost recovered: $20,000 Percent of value recovered from the project: 67%
A less expensive alternative to completely gutting a kitchen is an upgrade. Replacing dated appliances, refinishing cabinets and changing out tile backsplashes are some cost-effective updates that can still modernize a kitchen and make it more appealing to buyers.
While only 17% of realtors suggest sellers completely upgrade their kitchens, 57% have suggested a kitchen upgrade. A quarter of realtors have said a kitchen upgrade most recently helped complete a deal. In addition to the resale value, kitchen improvements can also help you enjoy your time in your home, with better functionality and livability cited by 28% of respondents as the most important result of their remodel.
3. Bathroom Renovation
NARI Remodelers’ cost estimate for the project: $26,000 REALTORS® estimated cost recovered: $15,000 Percent of value recovered from the project: 58%
Bathrooms are another place where a home can show its age, and potential buyers may hesitate at the cost and work involved in remodeling an outdated bathroom after buying a home. Still, while 45% of realtors have suggested sellers complete a bathroom renovation before completing a sale, only 6% said the project most recently helped them complete a deal.
4. Add New Bathroom
NARI Remodelers’ cost estimate for the project: $50,000 REALTORS® estimated cost recovered: $26,000 Percent of value recovered from the project: 52%
A remodeling decision often driven by function rather than a desire to modernize, adding a new bathroom is nearly as expensive as completely remodeling a kitchen, but with less of a “wow factor” for potential buyers. With only 8% of realtors suggesting sellers add a bathroom and only 2% saying the project most recently helped cinch a deal for them, this may be one project that makes more sense for homeowners planning to be in their homes for several years.
5. New Master Suite/Owners’ Suite
NARI Remodelers’ cost estimate for the project: $112,500 REALTORS® estimated cost recovered: $60,000 Percent of value recovered from the project: 53%
The costliest project on the list, a new master suite or owners’ suite, is another project that may have greater value increasing your enjoyment while living in the home rather than in making it attractive to future buyers. Eighty-eight percent of respondents said they have a greater desire to be home since completing the project. Only 4% of realtors have suggested sellers complete an owners’ suite before attempting to sell, and only 1% said the project most recently helped cinch a deal for them.
Deciding where to focus your home renovation budget? Make a list of the reasons you’re considering each project. Want to attract future buyers and increase the value of your home? Kitchens and remodels to baths remain a good place to start. If you plan to remain in your home for a number of years, you may want to update a bedroom, add a bathroom, convert a basement to a living area, or any other project that will add to your own appreciation of where you live.