Due to tax law changes and rising costs, experts predict it may become more difficult to sell your home. This is why it’s important to make the correct improvements in order make your abode attractive to buyers while increasing its value. Before diving in, create a solid plan so that you’re not wasting money or time.
Establish a goal-selling price
Establishing a goal is necessary in order to know how much you need to invest. Start by doing a little research in your area to help you determine your home’s After-Repair-Value (ARV). Next, deduct the price you originally paid for the home in order to determine the price you should spend for materials and labor, financing charges, closing costs and holding costs, if applicable. Be careful not to go overboard with your renovations or you won’t get a return on your investment. Making neighborhood-appropriate changes will help you stay on track.
Figure out how you’re going to pay for the improvements
While cash is obviously the best form of payment, it’s not always possible if you’re investing a lot of money into your renovation. Other common options include refinancing your mortgage, getting a home equity line of credit, getting a home equity or construction loan, a reverse mortgage and credit cards.
Bigger isn’t always better
It’s not necessary not build an addition to increase the square footage of your home in an effort to attract a buyer. Instead, strategically increase the amount of living space with changes such as finishing a basement, remodeling an attic and creating an office or playroom.
DIY projects can go a long way
Small, cost-effective DIY projects can have a big impact. Consider updating faucets and fixtures, creating an attractive laundry area, turn a wall into a bookcase, add curb appeal with manageable landscaping, refinish hardwood floors, add crown molding, paint the garage floor — the list is endless.
5. Know which large projects to invest in
The following renovations are known for having the greatest impact on the value of your home:
- Roof repairs: Not only is a tattered roof an eyesore, it tells the buyer that there may be future problems with water damage.
- Family room addition: It’s one of the most popular rooms in the house, so make it functional, spacious, and attractive.
- Basement remodel: You’re adding more functional space without increasing the square footage of your home.
- Two-story addition: This is a biggie, but it’s known for having a 71 percent return.
- Kitchen remodel: Consider new cabinets, counters, lighting fixtures and plumbing — anything to keep the space from looking dated. Opening up the room, making it energy efficient and adding functional pieces like an island will add to the rate of return.
- Steel entry door replacement: A safety measure that should still look attractive.
- Fiberglass attic insulation: Along with getting back 108 percent of the cost of this project, the energy savings translates into lower heating and air bills.
Stage and declutter
This means removing clutter and depersonalizing your space to create a neutral environment that makes it easier for a potential homebuyers to picture themselves living there. There are professional services that can help you through this process should you not be sure about what’s appealing and what’s not. Even if your home is a palace, if it’s dirty, it’s not going to sell. Simple cleanliness can deliver a 3-5 percent return on investment, according to Consumer Reports.
Keep in mind that the average return on investment is 56 percent of the cost of the remodel. While more homeowners are making updates, those investing in extremely high-end projects are not getting as much back. Create a solid plan so you don’t get off course.
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