In a nutshell, the following chart will give you a quick look of what you can do to your home to get the most return when you sell. It has been compiled from several published surveys and shows typical payback for some popular remodeling projects.
- Kitchen remodeling – 90%
- Add a bathroom – 90%
- Bathroom remodeling – 80%
- Install central heating – 90%
- Install central air – 75%
- Add a deck – 70%
- Replace windows – 70%
- Add a room – 55%
- Build a pool – 45%
- Finish a basement – 40%
So if you’re thinking about remodeling your kitchen, you can see that it will bring you a better return than finishing your basement. As you can see, when it comes to home improvements, some are definitely more profitable than others. As a general rule, kitchen and bathroom projects usually get a nice return on investment, typically 90% or more while things like adding rooms or finishing basements tend to pay back the least.
You must remember there are a number of factors that go into determining how well a project will pay back and you must pay attention to more than charts and surveys. Since payback value depends a lot on the current market conditions, it is important to know those conditions in your area. If the market is hot and homes are selling fast, you can expect a higher payback value than you would get in a slow market. If you are not sure if your area is hot or not, contact your Realtor and get a market survey or sign up for the MLS Market Snapshot and you will get this information sent to you in the privacy of your email.
The type of projects you do and how it fits in with other homes in the area can have a big influence on payback, too. If you put your money into the wrong type of improvement, you won’t get your money back. But if you’re smart about what you do, you can make money. The payback will be better on improvements that are in demand and conform to neighborhood standards. Adding a second bathroom in a neighborhood where most homes have two bathrooms will give a high return on investment. However, building a large addition that makes your home twice as large as the other homes on the block probably won’t pay back very well. Likewise, the popularity of a project will factor into how much it pays back. An improvement heavily customized to your wants and needs won’t pay back as well as something more common to other homes in the neighborhood.
Another factor to consider is the cost of the improvements. If you can do the work yourself, you can save significantly on the cost of the project and greatly improve the chances of getting a good return on the investment. Take care and make good judgments when it comes to putting money into your property. The up side is making your money back and maybe more. The down side is loosing your money and not being able to regain any from the sale.
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In selling your home, you are able to provide some help to the buyer with the closing costs.
