We've all seen those reality T.V. shows where a team of house flippers turns a huge profit by remodeling an entire house... but are they realistic?
More importantly, should you consider making a big renovation to your house before selling? Will you see a return on your investment?
In "reality" its not that simple.
Renovations ... Who Needs Them?
According to a recent report by Remodeling Magazine, most homeowners will only recoup an average of 64 percent of the cost of a renovation, if the home is sold in the same year. To put this statistic in perspective, let's say you spent $40,000 on the kitchen remodel that you "thought you had to have in order to sell your home for top dollar." According to the report, you will only increase the value of your home by $25,600, which means that you will have lost $14,400 on your remodeling project.
What about a bathroom remodel, adding a composite deck, or replacing siding? Do those projects have a positive Return On Investment (ROI)?
According to this report there just aren't many projects worth considering. For example, replacing a steel door can achieve a 101.8% return. But is that really worth your time? Do you really want to go through the trouble of spending $1,000 on a new door, having it professionally installed, just to make $18?
- Bottom line: If upgrading your home will make you happier, and you are willing to spend the money, then go ahead and make the upgrade. It could make your house more appealing or sell faster... Just don't expect to see a big return on your investment when it comes time to sell.
It's worthwhile to keep in mind that even professional investors lose money on some of the houses they flip.
There Is Some Good News.
Home staging is one of the most cost effective ways of increasing your homes appeal. According to this report it could increase your sales price by as much as 1-5%.
With that said, If you are planning to stage your home, I'd suggest adopting a "less is more" mentality.
Remember that one of the keys to selling a home is to help the buyer envision their things, their life, and their family living in your home. To help a buyer fall in love with your home, without breaking the bank on a large remodeling project, you can consider completing these small projects.
Here's what I'd suggest:
- Get Rid Of Clutter - Removing clutter is one of the easiest projects that you can complete to help your home be ready for future buyers. Say goodbye to coats in the front hall, remove kids toys from play areas, and clean up the kitchen.
Does your living room have one too many pieces of furniture? Is your basement filled with old knickknacks? Removing these items can help to set the stage for future buyers. It is also a great way to step back and take a look at the areas of your home that need slight improvements. Maybe you need to change the carpet upstairs, update the door handles throughout your home, or repaint the baseboards in your bathrooms. No matter what, getting rid of clutter is the first step towards seeing your home through the eyes of future buyers.
- First Impressions Reign Supreme - While people like to think that they don't judge, the truth of the matter (at least so far as Real Estate is concerned) is that first impressions are critical to the successful sale of a home for top dollar. Instead of thinking about completing a bathroom remodel (sorry, that will only cost you money rather than increase your home's value), you should instead focus on creating a great first impression.
- Curb appeal and interior "flow" can be enhanced with inexpensive landscaping, having a clean home and inviting home, and moving around a few key pieces of furniture. Make sure that the grass is green and cut, a few flowers are planted to bring a spot of color, and that your home sparkles from top to bottom.
Strategize To Capitalize
The moral of the story is clear, if you are thinking about selling your home after you complete an HGTV-worthy home renovation, be aware that the grass isn't always greener on the other side. In other words, the majority of large home improvement projects do not deliver a positive ROI. Instead, you would be better off to complete small projects, stage the home properly, and leverage the negotiation and marketing skills of a savvy Realtor to sell your home.