This regular sponsored Q&A column is written by Eli Tucker, Arlington-based real estate agent and resident of Arlington. Please submit your questions to him. by email for answer in the next columns. Video summaries of some articles can be found on YouTube at Ask Eli, live with Jean playlist. Enjoy!
Question: We plan to put our home on the market this spring and are looking for advice on home improvement projects to maximize our sale. What advice do you have on home improvement projects with the best resale value?
Answer: The decisions you make about whether or not to spend money on improving your home before a sale can influence your bottom line more than most other decisions you make during the selling process. These are also the decisions you have the most control over, so take your time and plan carefully.
Most renovation projects lose $$$ on resale
Remodelage.com publishes an annual report showing the return to resale of specific renovations, depending on the region of the country, and the 2022 report was released earlier this month. Unfortunately, I can’t share the DC Zone report due to copyright issues, but it’s worth visiting the link yourself (they require background information).
Their report findings show that the majority of projects (e.g. bathroom/kitchen renovation, new roof/windows/cladding), done individually, return only 50-80% of the cost. I saw another Zillow study that shows similar projections.
There are, of course, always exceptions to this advice. For example, if most of your home has been updated except for one room/bathroom, you’ll probably get a much better return on making modest upgrades to the space behind to put it level with the rest of the house.
Another example is improving something that is in exceptionally poor condition, such as replacing old rotten single-glazed windows that don’t work and leak air; you’ll likely earn near or above 100% return on this job rather than the ~65% determined by the Remodeling.com study.
So when you’re considering larger-scale home improvement projects — kitchen renovations, new roofs, porch additions — it rarely makes sense to do this work strictly for resale purposes, but only if you get personal value out of it. .
Should you ever spend on list preparation?
The study mentioned above refers to more expensive home improvement projects and does not include the most common (and profitable) jobs done for listing preparation, such as painting, washing under pressure, cleaning, landscaping and flooring.
Prior to most sales, each homeowner should make a list of possible repairs and upgrades and collect prices for all worthwhile projects. If you are considering hiring a real estate agent for your sale, I highly recommend doing so with your agent, who should have a good understanding of profitable and unprofitable projects for your market/property type and have a team of experts. contractors available to support the work.
They should have enough insight into buyer preferences, your submarket, and project cost to prepare a set of listing preparation recommendations based on your home and budget, rather than a plan. generalized one-size-fits-all.
After preparing a comprehensive list of potential upgrades, you can group them into tiers and analyze each tier for cost, project schedule, and impact on expected resale value to determine which upgrades make the most sense. These levels generally fall into three categories:
- Cleaning, cleaning: This focuses on low cost, high return items to make a home more presentable, such as painting, deep cleaning, repairs, light landscaping, etc.
- Upgrade : Invest in more expensive project(s) to bring them up to standard with the rest of the house. For example, upgrading a dated bathroom if the rest of the house is being updated so that the bathroom doesn’t detract from the value of other upgrades.
- Renovation/turnover of ownership: Similar to what an investor might do for a dated home in an expensive neighborhood, a homeowner might choose to make a major investment in updates and enjoy a large profit.
Consider all costs
The cost of upgrades goes beyond the cost of labor and materials. Remember to consider things like:
- Your time to manage the work (be careful, a real estate agent will generally take care of the project management)
- If you live in the house while working, the inconvenience of having to do some work while you’re there
- If you move before starting the work, the cost of ownership while the work is in progress
- Risk of something going wrong during construction (more applicable to larger projects)
- Contingency budget for unforeseen work that may occur during the project(s)
Always look for a return on investment of 100% and more
There is no doubt that renovating your kitchen will generate a higher selling price, but it is rarely advisable to invest money in improvements if you do not return more than 100% on the investment. This is where the challenge and strategy lies in planning your improvements. Understanding the profile of your potential buyers and what they value, along with other factors such as market conditions and property type, is key to making investments that deliver profit, not just a higher price. .
If you would like to discuss buying, selling, investing or renting, please do not hesitate to contact me at [email protected].
If you would like a question answered in my weekly column or to discuss buying, selling, renting or investing, please email [email protected]. To read one of my older articles, visit the blog section of my website at EliResidential.com. Call me directly at (703) 539-2529.
Video summaries of some articles can be found on YouTube at Ask Eli, live with Jean playlist.
Eli Tucker is a licensed real estate agent in Virginia, Washington DC and Maryland with RLAH Real Estate, 4040 N Fairfax Dr #10C Arlington VA 22203. (703) 390-9460