If you’re a home owner, chances are good that you’ve been concerned about the price of your home dropping in value. Or maybe you’ve had the unfortunate experience of watching that "For Sale" sign sit and collect dust on your front lawn for months on end. Even though there’s not a magic wand to get you the money you want from your house, there are methods that can drastically help the sale of your home with higher bids and higher rent rates.
Before I get into the nitty-gritty, there are a few things that every homeowner must appreciate. The first is that prospective homeowners, now more than ever, are looking at the long term home value. Whereas in the past, many first time home buyers looked at their first home as the start of a new life, now many would-be homeowners are having to consider whether their home will retain value over the long term as they continue to see the market decline. This is especially true for would-be buyers who look 10 or 20 years down the road and decide if their investment will live up to it’s promise.
The second is concerning the price perception of a home’s value. Certain aspects of a home drive up home “perceived value” into a higher ratio than other aspects. Consider the cost of re-roofing your house. The average cost to re-roof a home is between $5,500 and $8,500 but adds virtually nothing to the perceived value of the home. Similarly, energy saving tools like solar panels and water recycling, can cost upwards of $15,000 and add only a fraction of that back into the home value. Now consider the cost to upgrade all your kitchen and bathroom countertops to granite or marble. The average cost to professionally upgrade these is anywhere from $2,500 to $4,500 but can add anywhere from $4,000 to $10,000 to the sale value of your home. Why? The difference is because there is a perceived value of luxury to these types of upgrades whereas other elements don’t have the same price perception. The market demographic who appreciates that luxury is enticed, and willing, to spend extra for it.
It is also worth noting that some elements of a home improvement are longer lasting than others, this should factor into your ‘return on investment equation’, so to speak. Let’s say for example that you were to remodel your entire kitchen. We could safely assume that installing new kitchen cabinets will assume 40-50% of the total project. If installed professionally, new cabinets should last anywhere from 10 to 20 years, again depending on the installer and materials used. Stainless steel appliances also have a lifespan of between 10 and 20 years before they would be replaced. Stone counters for that kitchen, which may account for 20% of the project, if installed professionally and maintained will last indefinitely. These are factors that home buyers are considering as they look into the future value of the home.
As a real estate professional that has turned over many houses in my career, I have compiled a list of my top 5 elements that I recommend to homeowners who want to add real value to their home. As I am located in the Phoenix, AZ Metro area, some of these will vary depending on your locale.
#5 Fresh Paint – While repainting your living rooms and bathrooms won’t add anything to the price of your home, you can be quite assured that it will help your home sell much faster. This is arguably due to the perception of ‘newness’ or freshness that is felt by prospective buyers as soon as they step into the home. Complete interior painting is usually priced from $1,100 - $2,000 and upwards for larger homes. My personal feeling is not to spend any more than you have to, but you’ll usually be glad you did.
#4 New Flooring – While natural stone has always been ‘the look’, there are a great many synthetic products that mimic this look that don’t require the maintenance and upkeep that comes with natural stone product. The first rule of thumb is to repair any damage done to your current flooring, this usually won’t add any additional value but it will help you get your asking price since the buyer looks at any maintenance issue as an additional out-of-pocket expense. The second is to evaluate your budget, while it may not be feasible, or a worth-while investment, to re-tile your entire house, it is usually worth it to re-tile the kitchen and bathroom areas to get the most bang for your buck. Since a newly remodeled kitchen can drastically increase the value of a home, it is seen as a more worthwhile investment to cover that area. Typical costs run to approximately $3,000 for new tile or hardwood flooring in a medium sized room but can add 20-40% returns of your investment in added value to your home; and add to the overall price perception of the kitchen and home as a whole.
#3 Stainless Steel Appliances – Stainless steel refrigerators, ovens, and microwaves are a great value for any home since they go with virtually every kitchen style from rustic to modern and anywhere in between. They have great longevity, are easy to clean, and won’t stain. Your average price tag to outright replace your existing appliances will cost around $2,200 for a full appliance package and you can expect to get between $3,500 and $5,000 back on the value of your home. Most importantly, they increase the overall value perception of the home since they have the immediate appeal of making any kitchen appear much more livable.
#2 Granite Countertops (Kitchen&Bathrooms) – Granite counters, on their own merit, can make an immediate transformation from the very run-of-the mill homes to very desirable homes of lasting value and luxury. Since granite comes in so many colors and styles, it can easily accentuate the theme and style of your kitchen and bathrooms. Granite has also had the great benefit of becoming much more affordable in the last 10 years. The average pricing for granite installation can be anywhere between $2,200 and $4,200 and can add as much as $7,000 to $15,000 to the value of the home (mostly varying on the quality of the rooms as a whole) which makes granite a fantastic product for immediate turnaround sales. Best of all, since granite countertops simply install on top of existing counters, they can be installed usually in 24 hours leading to less stress for the current homeowner.
#1 Kitchen and Bathroom Cabinets – One of the very first things that prospective buyers look at is the quality of the cabinetry. I would estimate the cabinetry makes up between $8,000 and $20,000 to the value of the home depending on its condition and the quality of the wood or laminate. I have seen cabinet remodels professionally installed for anywhere between $3,500 and $7,500 depending on the contractor. Again, the quality of the wood product speaks to the longevity of the product which will directly help your sale. Maple and red birch are my picks for “initial cost vs. long term value” since they are relatively inexpensive, although high in demand, and will last just as long as the more expensive woods like walnut and ebony. Darker woods have a tendency to appear more luxurious than the lighter shades although it really comes down to how the package looks as a whole. Planning is everything.
If I know that an individual is considering any sort of remodeling for the purpose of immediate sale / turn over, I recommend that they use more neutral colors when choosing granite and cabinets because they will work with virtually any style or theme that the new owner wishes to go with. I have personally seen homes that were decorated with otherwise very beautiful pan-Asian themed darker woods sit for months without a sale because they were so costly to swap out and didn’t quite have the broad appeal that the original homeowner thought.
The things I have listed are all elements that have worked for me in my experience, your experience may differ. I am reluctant to drop large sums of money all at once in the event that things do not turn out as planned, which is why working with your realtor is advised to gauge exactly what elements will work best in your neighborhood and what is sought after from prospective buyers.