Each payment you make on your mortgage increases your home equity. While there are some “hidden” factors affecting home value, you also can build value and equity in your home in a reliable way by making strategic improvements. Choosing home improvements that increase value is an important step in the process.
Understanding Return on Investment
When deciding whether making certain improvements is worthwhile, you’ll want to estimate your return on investment. You can think of it as the cost of the improvement relative to the value that’s being added. For example, with a renovation that costs $12,000 and adds $9,000 of value to your home, your return is 75% because that’s how much of what you spent is getting added in home value.
What home improvements add the most value? Here are 16 top improvements to increase value in your home.
1. Upgrade the Kitchen
Replacing old appliances with newer, energy-efficient models is a relatively easy way to add value to your home. According to Consumer Reports, spending $5,000 on updating your kitchen could increase your property value by 3% to 7% when you sell. Creating a modern style with granite countertops or new cabinets also adds value.
2. Interior Paint
If you’ve lived in your home for a long time, it can start to show — especially when it comes to faded or stained paint. According to a 2020 Zillow report, 35% of homeowners said they repainted the interior walls before selling. While you’re at it, you might want to consider using neutral colors — grays and beiges — as buyers tend to prefer those tones.
3. Add a Home Office
A 2021 survey of real estate agents found that 60% say a home office is a top priority for buyers. It makes sense when you consider how many people are working remotely. Home offices also have a high return on investment and can add more than $10,000 in resale value.
4. Finished Basement
Finishing your basement can be a good way to invest in your property value. You’ll be adding square footage to the home using space that you already own. A recent study found that the typical basement remodel costs $71,115 and has a resale value of $49,768 — providing a 70% return on average.
5. Open Floor Plan
Knocking out a wall or two can go a long way. According to the National Association of Home Builders, 85% of homebuyers prefer open layouts between the kitchen and dining room, 79% of homebuyers want an open layout between the kitchen and family room, and 70% want an open layout between the dining room and family room.
6. Exterior Paint
If the paint on the outside of your home has begun to fade or chip, then it’s probably time for a fresh coat. Repainting the exterior of your home can add as much as $7,500 in resale value.
Other ways to spruce up the appeal of your home’s exterior appearance also can be effective. According to Remodeling Magazine, adding a manufactured stone veneer in 2021 cost an average of $10,386 but had a high return of about 92%.
7. Upgrade the Landscaping
Mowing the lawn, trimming the trees and shrubbery, and adding fresh flowers and mulch can be worthwhile. A recent report found that a typical overall landscaping upgrade can cost about $6,000, but the average return is 83%.
8. Clean, Replace, or Refinish Flooring
Whatever type of flooring you have, it can get grubby over time. Replacing or upgrading your flooring typically has a good return on investment. If you have wall-to-wall carpets, then you’ll want to get them deep cleaned or replaced. If you have tile or hardwood that’s damaged, then you may want to have it buffed out or replaced.
9. Replace the Front Door
By replacing your old entry door with a new steel one, you could recoup anywhere from 65% to 91% at resale. While you’re at it, you also could replace your mailbox and house numbers to freshen up the look of your home at a low cost.
10. Upgrade Windows
Updating your windows will make your home more energy-efficient while looking more modern. Drafty windows that don’t close properly can cost you big time when it comes to heating and cooling bills. Upgrading those windows can lower your energy costs by as much as 12%, and the cost of installing them has a return of about 68%.
11. Upgrade the Garage Door
While it may not seem like a big deal, replacing your garage door can give you a great return on investment. A new garage door not only looks better and offers better protection from the elements, but it also offers a high return of as much as 94%.
12. Upgrade a Bathroom
Bathroom upgrades are expensive, averaging more than $10,000. But in addition to being highly attractive to buyers, they typically return about two-thirds of the cost in increased home value. If you’re on a budget, even small improvements — such as replacing the fixtures or recaulking the tub — can help.
13. Energy-Efficient Upgrades
Beyond kitchen appliances, you also can invest in a high-efficiency washer and dryer. In addition, a new heating, ventilating, and air conditioning system gives you a return of about 60%, and an energy-efficient HVAC system can increase your home’s value by 5% to 7%.
14. Smart-Home Features
Tech features like smart lights and thermostats are popular — and even expected — especially among younger homebuyers. Smart technology can save you money on heating and cooling costs and add convenience to your home. While the tech is too new to know for sure how much it adds to market value, estimates are as much as 5%.
15. Make an Addition to Your Home
Adding square footage to your home is another great way to increase its value. Adding a garage, bedroom, or bathroom likely will increase the value of your home. Extra living space can add an average of 5.3% to your home value.
16. Add Outdoor Features
Some potential additions you can make to the exterior of your home to boost your property value include:
- Shaded areas.
- A deck or patio.
- A porch.
- An outdoor fireplace.
- An outdoor kitchen.
- A pool.
- An in-ground hot tub.
FAQ
Here are answers to some frequently asked questions about increasing the value of your home.
