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Purchasing a home is one of the most significant investments many people make in their lifetime. Over time, homes can appreciate in value, and prices have been rising rapidly for the past few years. The May 2024 Case-Shiller U.S. National Home Price NSA Index from S&P CoreLogic showed a 6.5% increase in annual home-price growth in March.
Even so, there’s a lot a homeowner can do to proactively maximize their home’s value. Whether you’re making cosmetic fixes to your home or enhancing energy efficiency, investing in your home can have many benefits.
Why maximize your home investment?
Increase your home equity: Home equity is the difference between what you owe on your mortgage and the home’s current market value. Increasing your home’s value boosts your equity. Increased home equity can let you refinance your mortgage with better refinance rates or terms. If you need to consolidate debt, or manage college tuition, you can leverage your home equity for cash through a home equity loan or cash-out refinance.
More profitable sale: When you decide to sell, a higher home value can mean you can turn a larger profit. Investing in your home can also make it more appealing to potential buyers willing to pay a premium for well-maintained, turnkey homes that require less immediate investment on their part.
Ways to increase the value of your home
The right upgrades can not only improve your home’s value in the long run but also make life easier and more pleasant for the home’s current residents. Here are some strategic improvements to consider.
Energy efficiency
Improving your home’s energy efficiency can be a smart investment that can slash heating and cooling costs and help you lower your monthly expenses. Consider upgrading to energy-efficient windows and doors, adding insulation, or installing a programmable thermostat. You can also replace old appliances with more energy-efficient models.
The National Association of Realtors’ 2022 Remodeling Impact Report reveals that the return on investment (ROI) on an insulation upgrade is up to 100%. This is a great example of a high-impact upgrade that can lower utility bills as well as improve your home’s value.
A fresh coat of paint
Worn exteriors or dated interiors get a whole new look with the right paint colors. Repainting high-traffic areas, such as living rooms and kitchens, can freshen up the space without a significant investment.
While most real estate wisdom suggests neutral interiors (white or beige) are ideal colors to tempt buyers, a 2023 survey from Zillow suggests that shades of gray may be the moneymaking hue your house needs. Charcoal gray kitchens may sell for around $2,512 more than similar homes, while a dark gray living room can boost offers by $1,755.
You don’t have to restrict yourself to just the walls; simple DIY projects like painting bathroom cabinets may offer more ROI compared to a full bathroom renovation.
Curb appeal
First impressions matter, and the exterior of your home is the first thing potential buyers see. Consider boosting your home’s curb appeal through simple landscaping upgrades like new plants, mulch, and a well-maintained lawn. The cost recovery for standard lawn care is around 217% and around 104% for basic landscape maintenance.
Replacing your front and garage door (especially with a steel front door) may offer a cost recovery of about 100% and 102%, respectively. These projects are relatively easy but can make a big difference to your home’s market value. You can also enhance curb appeal with fresh exterior paint or features like an outdoor kitchen or well-furnished patio/deck. Keeping your front yard clean and well-maintained, washing windows, and trimming trees can help too.
Increase the livable space
If the layout allows, adding more livable space to your home may significantly boost its value. If you have an unfinished basement or attic, converting these spaces into functional rooms can add square footage without changing the home’s footprint. Adding an extension above the garage or to the back of the house is another way to increase living space.
With so many people working remotely, adding a home office can be a huge selling point for buyers. You can also turn the extra space into a guest suite or entertainment area.
These larger renovations can be expensive, but a cash-out refinance can be a useful way to access the funds you need to make major changes to your home. Refinancing also gives you the chance to buy discount points (commonly referred to as mortgage points) to reduce your monthly mortgage payment.
Clean up
When you’re ready to sell your home, don’t underestimate the value of cleaning and decluttering your home. A clean, tidy home is more appealing to buyers and can help them envision themselves living in it. Remove personal items, excess furniture, and clutter to make rooms appear larger and more inviting. Thoroughly clean all areas of the home, including carpets, windows, and appliances. Pay special attention to kitchens and bathrooms, as these areas are often scrutinized more heavily by buyers. Hiring professional cleaners may be worth the expense when you’re listing your home.
Find the right investments to maximize your ROI
Simple improvements to your home can boost its market value and potentially increase your equity. But it can be tempting to go overboard and spend too much. Create a strong budget for your planned improvements and consider speaking to a local real estate professional to learn about the ROI and buyer demand for certain upgrades. Lastly, prioritize your own needs. If you plan to live in the house for several more years, it may not be worth it to make costly changes that won’t bring you joy.
Disclaimer: Article content is intended for information only. It may not reflect the publisher nor employees’ views. Consult a mortgage professional before making financial decisions. Publishers or platforms may be compensated for access to third party websites.
