The Renovations That Up Your Home's Value (and the Ones That Don't)

Is digging up the backyard to put in a pool worth it? What about upgrading a tired-looking kitchen with gleaming marble countertops? And what about installing high-tech speakers—throughout the house? If you’re planning to renovate your home, you may already be asking yourself these questions. But when it comes to increasing your home’s appraisal value, the answer to them isn’t always a resounding yes.

To help ensure that your reno dollars are well spent, the team at LearnVest asked real estate experts across the country to weigh in on the top five home improvement dos that can boost resale value—and five don'ts that just aren't worth the extra expense.

Reno Do #1: Upgrade Your Kitchen

All of our experts agree that a kitchen renovation should be at the top of your list, since it's the heart of a home—the room where families spend most of their time. But where to start? A couple of givens include upgrading to stainless steel appliances and installing countertops made from engineered stone or granite, because these fairly easy changes will improve the aesthetic appeal of the space. Details can also make a difference, like putting shiny knobs on cabinets and purchasing a sparkling new faucet for the sink.

Another wise kitchen upgrade? Knocking down a full or half wall, so you can connect the kitchen to a den or living room. “It makes the kitchen feel more spacious," says Phyllis Rockower, owner of the Real Estate Investors Club of Los Angeles in California. "If you’re cooking, you can still hear what people are saying during a party, or keep an eye on your kids while they’re playing.”

Reno Do #2: Revamp Your Bathroom

A toilet that looks old, cracked or dirty (or doesn’t flush properly) is a turn-off—and the same goes for a vanity, which should be eye-catching and practical. “Install a vanity that recesses into the wall, so it saves space,” advises Alen Moshkovich, a broker for Douglas Elliman in New York City.

Proper lighting can also be a great value booster, such as adding a window in the bathroom, so natural light can illuminate the space. There's one other more simple fix that homeowners tend to overlook: Reglazing a tub, rather than getting a new one, will save you money and upgrade the look of your bathroom.

Reno Do #3: Go Greener

“In the last four to five years, there’s been a growing demand for green housing,” says Tom Ferstl, a commercial and residential real estate appraiser at Ferstl Valuation Services in Little Rock, Arkansas. “Making your home more energy efficient is a plus—anything that helps keep heat in during the colder months and out during the warmer months will help.”

The changes can be small, such as adding storm doors or a ceiling fan in each room. Or they can be large, like double- or triple-paning your windows. Want more ideas on how to renovate your home in a green way? Check out Regreen, a site created by the American Society of Interior Designers Foundation and the U.S. Green Building Council.

Reno Do #4: Invest in a Sprinkler System

Many homeowners don’t want to be bothered with maintaining a stunning, landscaped garden, so planting tons of tress, bushes or flowers isn’t necessarily going to elevate your home’s value. But everyone wants green grass, so adding a sprinkler system that automatically turns on and off is a good investment, says Ferstl, because it allows a buyer to keep a lawn looking good without much work.

Reno Do #5: Install Built-In Speakers

High-tech homes stand out and will impress buyers. Your best bet is to centrally wire a sound system in your home, and put a speaker in every room, so you can control music from anywhere in the house with one remote. Rockower also suggests installing surround sound in the den or living room (basically wherever you watch TV), which makes watching movies or sporting events more exciting.

Reno Don't #1: Put in a Pool

You may think that a beautiful backyard pool will make buyers flock to your home, but many families don’t want to deal with the maintenance or the liability of an accidental drowning. “It’s an especially bad investment in the northeast and the northwest, where you have few hot months to actually use a pool,” says realtor Brendon DeSimone, a member of the National Association of Realtors and an expert contributor to Good Morning America and HGTV.

Reno Don't #2: Convert a Bedroom

Turning a bedroom into a room that’s specific to your interests—such as a wine cellar or a library—is a risk. Once you start embedding wine refrigerators or bookshelves and customizing the space's structure, the room becomes less valuable, because the next owner may not want to spend money renovating that room. “If you insist on doing it, at least make it easy to ‘un-do’ later when you want to sell,” says DeSimone.

Reno Don't #3: Lay Down Carpet

Don’t bother carpeting any room in the house. “Natural hardwood flooring is what everyone wants these days,” says Moshkovich. Plus, wood floors tend to be easier to clean, they don’t show as much dirt and they’re better for family members who suffer from allergies. “If you're looking to save, engineered wood is cheaper than 100% natural wood—and it still looks good,” suggests Moshkovich.

Reno Don't #4: Install Ornate Lighting

Buyers like bright lighting, but if you empty your wallet buying an over-the-top chandelier, you probably won’t get most of your money back, notes Ferstl. “Some people go all out when decorating a dining room, but the next owner may want to turn the dining room into a bedroom, so it’s often a waste," Rockower says. Her recommendation: Opt for subtle high hat or recessed lighting or get a basic chandelier or hanging fixture from Home Depot—you can find a bunch that look good for under $100.

Reno Don't #5: Redo Your Garage

“I’ve seen some people turn garages into family rooms or play rooms—and then have a hard time selling their house,” says DeSimone. “Most people want a garage to stay a garage.” Not only do buyers want to protect their cars from rain and snow, but they also need a place to put dirty outdoor stuff, like lawnmowers, leaf blowers, shovels and garbage cans. Bottom line: Don't go glam with your garage!

How to Boost your Home's Value

Most appraisers have stories of homeowners irate over the fact that the special remodeling job they performed added zero value to their home. The imported Italian tile you used in your entryway or the pool in the backyard may be of immense value to you while you live in the home, but unfortunately they aren’t items that buyers shopping in your neighborhood value.
To get the most bang for your home improvement buck, consider these 10 best home improvements:

1. Indoor Systems

Before you consider cosmetic and even functional improvements (such as adding additional square footage) to the home, make all needed upgrades, repairs or replacements to the home’s major systems. Major systems include plumbing, heating, electrical and sewer systems, among others.
Buyers want assurance that these basic items are in working order and won’t need to be replaced or repaired in the near future, an issue that will most likely be addressed in the home inspection. Older homes may require updated wiring and plumbing. An old roof should be replaced. Address problems with heating and air-conditioning units.
Looking for more information on major systems? Check out this Yahoo! article about the effect of improving major systems on home buyer interest.

2. Outdoor Replacement Projects

 
 
Replacement projects will give you more added value than remodeling projects, according to Remodeling Magazine. Fortunately for homeowners, these types of projects are also the least expensive and add to the home’s curb appeal. Consider replacing the garage door, siding, the front door and windows. The average return on investment for these projects is almost 72 percent.

The ROI on replacing garage doors, siding, front doors and windows is almost 72%!

The magazine suggests fiber-cement or foam-backed vinyl siding, adding a steel entry door, and vinyl window replacement.

3. Attic Bedroom

The number one home improvement project as far as recouping a return on your investment is the addition of an attic bedroom, according to Remodeling Magazine. At a nationwide average cost of a little over $50,000, expect to recoup 72.5 percent of the cost of adding the attic bedroom when you sell the home.

4. Add an Additional Bathroom

Over the past few decades, the kitchen was the average homebuyer’s focal point when choosing a home. In 2011 bathrooms became more important to buyers than kitchens. That said, an additional bathroom, even a half bathroom, adds significant value to your home, according to the experts at the National Association of Home Builders (NAHB).
A half bath may add up to 10.5 percent to a home’s value, while a full bath can tack on an additional 20 percent. Of course, the amount of additional value you will receive varies according to the home’s other features.

In 2011 bathrooms became more important to home buyers than kitchens.

The price of adding another bathroom to the house varies as well, depending on region. If you live on the West Coast, plan on paying almost $50,000 for a new bathroom, according to Remodeling Magazine. The magazine also states that, at the sale of the home, you’ll recoup almost 67 percent of the cost of the additional bedroom. East Coasters can plan on spending a bit less – around $41,000, but will recoup less as well – 47.7 percent of the cost.
Tip: If you’re on a tight budget and can’t afford a bathroom addition, give the existing bathrooms a facelift. A fresh coat of paint, new fixtures and new flooring will add value and make the home show better.

5. Kitchen Improvements

Kitchens tend to be the heart of a family home so anything you do to improve your kitchen will add value. Again, painting the kitchen should be the first step, whether you plan an entire remodel of the room or just a minor facelift. Vinyl flooring tends to make the room look dated, so consider replacing it with laminate or tile. New cabinetry, kitchen sink fixtures and updated lighting will all add value.
Tip: Folks on a budget can still increase value by sanding and then painting or staining cabinetry and adding new hardware and by purchasing new (matching) appliances and new countertops.

6. Boost Curb Appeal

When a TV show can be built around this one subject, it’s a pretty good indication of its importance. Curb appeal is what beckons potential buyers into your home and underestimating its importance to the value of a home is a big mistake many homeowners make.
If you have a healthy budget, and your landscaping needs extensive work, consider hiring professionals for this home improvement project. A landscape architect can be pricey but necessary if your yard is in desperate need of an overhaul. According to Jeff Mitchell with the American Society of Landscape Architects (ASLA), curb appeal shouldn’t stop at the front yard, but should be extended to the backyard as well.
At the very least, clean the yard of any debris, trim trees and shrubs and spread fresh mulch in the planting beds. A poorly maintained front yard can result in up to a 10 percent drop in value, according to Houston appraiser Frank Lucco.

 Budget curb-appeal improving landscape projects include:

• Line the walkway with solar-powered lights. The big home improvement stores carry a variety of inexpensive styles and all you need to do is stick them in the ground. Not only are they functional – lighting your way at night – but they provide ornamentation as well.

• Green up the lawn, keep it mowed and edged and reseed bare spots.

• Add color to the planting beds. Be careful to keep your color choices aligned with the home’s architecture. In other words, don’t add cottage garden-type flowers to a bed in front of a starkly modern home. Certain plants are grown because of their interesting and colorful foliage, such as hosta and coleus, and are better suited to more modern homes. If you have questions about what to plant, consult with the experts at your local nursery.

• Plant a tree. Yes, it sounds like an Arbor Day slogan, but planting a tree in your front yard pays off by helping cut energy costs in the summer (if strategically located to shade the house) and by adding value to the home. Not sure which tree to plant? Use the fun National Tree Benefit calculator to assist you with making the right choice. Just enter your zip code and the calculator will bring up a list of trees suited to your region and let you know the benefits of each.

7. Refurbish the Basement

Converting the basement into a finished room adds usable square footage to the home. Finishing basements is one of the best ways to increase your home’s value as it transforms unfinished basements – glorified storage space – into a usable, attractive room.
Consider the following basement bar. Who wouldn’t be willing to splash out thousands for the privilege of owning something like that?
Here is a short list of rooms your basement can become – and accoutrements to put inside it – if you choose to renovate it:

• Sports den – Big screen TV, sports memorabilia, overstuffed couches and cushy carpeting
• Lounge – Pool table, wet bar, dark hardwood floors and a poker table
• Children’s play area – Playset, soft furniture like beanbag chairs, arts and crafts table and bins and shelves for toys and books

8. Additional Storage

Most new homes come equipped with lots of storage. Older homes, on the other hand, tend to lack even some of the basic storage options, such as a coat or linen closet. If you lack the space to expand closets or other storage spaces or build new ones, consider redesigning the spaces you do have.
There are specialty stores now dedicated to nothing but storage solutions. Do-it-yourself projects may include adding a complete closet system or adding organization details to a pantry.

9. Additional Square Footage

Every 1,000 square feet added to a home raises the value by more than 3.3 percent, according to a 2003 study for the National Association of Realtors®.
While that percentage doesn’t sound significant, when you put it into numbers it makes a lot more sense. For instance, if your home is valued at $200,000, a 3.3 percent increase adds an additional $6,600 to the value.
Additionally, the 3.3 percent statistic can most likely be adjusted upward based on the age of the study. The study also claims that each additional bedroom adds 4 percent to the value of the home.

Each additional bedroom adds 4% to the value of the home.

If your laundry is located in the basement, the value of your home decreases by two percent, so if you plan on adding square footage to the home, build a laundry room on one of the upper floors.

10. Miscellaneous Home Improvements

There are many small items you can add to the home that buyers will perceive as adding value. Some of these include:

• Alarm systems
• Water filtration system
• Luxury touches such as an upgraded dishwasher, whirlpool bathtub and built-in wine coolers may peak the buyer’s interest. Luxury homeowners can take this a step further by adding an in-home theater and additional spa-like features to the bathrooms.