Whether your goal is to renovate your home this year or sell it, making home improvements can increase your home’s value.
Home improvement statistics
- Homeowners spent an average of $10,341 on home improvements in 2021, a 25 percent increase from 2020, according to a recent report by Angi.
- Homeowners who completed work did an average of 3.7 projects, with an average cost per project of $2,800, according to the Angi report.
- In 2021, homeowners spent $376.9 billion in total on home improvements, according to a separate study by Angi.
- Increasing the home’s value ranked as the second-most important goal for home improvement spending, behind fixing existing issues, according to another recent report by Angi.
- The top five projects that add the most dollar value to a sale in 2022 are refinishing hardwood floors, installing new wood floors, upgrading insulation, converting a basem*nt to a living area and renovating closets, according to a joint report by the National Association of Realtors (NAR) and the National Association of the Remodeling Industry (NARI).
- Seventy-one percent of homeowners with upcoming renovations plan to forge ahead with the projects despite supply chain and inflation challenges, according to a January 2022 survey from Nationwide.
8 ways to increase the value of your home
1. Clean and declutter
To help boost the value of your home, begin by decreasing the amount of stuff that’s inside it. Cleaning and decluttering are relatively inexpensive tasks, even in bigger homes. Professionally cleaning a four-bedroom home costs between $200 and $225, according to HomeAdvisor.
Of course, you could save money by doing the work yourself. Start by going through cabinets and closets and making donation piles. Then clean out drawers and other storage areas, making sure you’re not keeping anything you don’t need or want.
2. Add usable square footage
Adding more usable space to an existing home can make a lot of financial sense, and that’s especially true in areas with limited available real estate where land and space are finite.
Homes are valued and priced by the livable square feet they contain, and the more livable square feet, the better, says Benjamin Ross, a Realtor and real estate investor based in Corpus Christi, Texas. As a result, adding a bathroom, a great room or another needed space to a home can increase function and add value.
Adding a separate mother-in-law suite can also be a smart idea, says Ross, noting that “most homes do not have this feature, so adding one sets you apart from the competition when it is time to sell.”
The national average cost to build an addition is $49,562, according to estimates from HomeAdvisor. The actual cost will vary depending on the type of room you’re looking to add. For example, tacking on a laundry room to your home might be as little as around $8,000, while adding a new bedroom with an en suite bathroom might run up to $100,000.
3. Make your home more energy-efficient
Projects that lower utility bills is a smart way to increase the value of your home. Installing a smart thermostat, for example, helps improve efficiency and save money, says Scott Ewald of Trane, an HVAC company.
“The right smart thermostat will allow a homeowner to control their home’s climate from anywhere, giving them the power to manage energy costs regardless of whether they are sitting on the couch or away on vacation,” says Ewald. “Such investments in home tech — particularly when connected to the HVAC, which is the largest mechanical system in the home — provides a strong selling point and highlights the home’s overall comfort, functionality, energy efficiency and convenience.”
It can cost between $200 to $500 to make this quick upgrade, according to Fixr, or an average of about $300.
Other ways to improve your home’s efficiency and value include replacing old, leaky windows, installing energy-efficient home appliances and adding insulation to your home. Keep in mind, though, that new windows and new appliances will be a much more expensive project.
4. Spruce it up with fresh paint
One of the most popular home improvement projects in 2022 is painting or wallpapering, according to Angi. A fresh coat of paint can make even dated exteriors and interiors look fresh and new — and it’s not that expensive, either.
Begin by repainting any rooms with an “odd” color scheme, says Timothy Wiedman, a former professor and personal finance expert who has flipped homes over his career. For example, did you let your then-11-year-old daughter paint her bedroom hot pink 16 years ago? If so, that’s a good place to start.
Your painting budget will depend on which rooms you’re hoping to give a new splash of color. For example, HomeAdvisor pegs painting a bathroom — usually the smallest room in the house — somewhere between $150 and $350, while a 330-square-foot living room might cost as much as $2,000.
5. Work on your curb appeal
From power washing your driveway to hiring someone to wash your windows and mow the lawn, improving curb appeal can make a big difference in your home’s value. In fact, curb appeal can account for as much as 7 percent of it, according to a 2020 joint study out of the University of Texas at Arlington and the University of Alabama.
Upgrading your landscape can go a long way, says Joe Raboine, director of Residential Hardscapes with Belgard.
Some ideas: a fresh walkway, shrubs, planters, mulching or even a new paver patio or outdoor kitchen.
6. Upgrade your exterior doors
Also in the vein of curb appeal, replacing an old front door can work wonders, says Wiedman. In the late ’90s, he and his wife replaced an old, ugly door with a solid mahogany door with a frosted, oval piece of lead glass. He stained the door himself to save money, and the result was “simply stunning.”
Don’t forget the garage doors, too, says Randy Oliver, president of Hollywood-Crawford Door Company. At a 93 percent return-on-investment, you’ll get back nearly every cent you spend, according to Remodeling magazine’s 2022 Cost vs. Value Report.
“The front of the home is the first thing you, your neighbors and prospective buyers will see,” says Oliver. “Garage doors often take up the most amount of space on the front of your home, so installing a modern glass panel door or a rustic wood door will dramatically improve your home’s appearance.”
7. Give your kitchen an updated look
Many buyers zero in on the kitchen as the central feature of a home, so if yours is outdated, it can ultimately affect how much you garner from a sale. Likewise, if you aren’t able to utilize your kitchen fully due to layout, space or other concerns, you won’t be maximizing the space.
This project, though, will require a lot of money, and you likely won’t get every dollar you invest back. According to the NAR/NARI report, the average kitchen remodel costs around $80,000, and a homeowner would likely get around $60,000 of value when it’s time to sell.
If updating your entire kitchen is too big of an undertaking, a minor remodel could still have an impact on your home’s value — think coordinating appliances and installing modern hardware on your cabinets. Talk with a real estate agent about what makes the most sense and what will command the most dollars from prospective buyers.
8. Stage your home
If you’re planning to list your home for sale, consider skipping cosmetic home improvements and go with a home staging service instead. Seventy-three percent of staged homes sold for over list price — an average of $40,000 higher — and staged homes move off the market nine days faster than the average, according to the Real Estate Staging Association.
Staging costs just over $1,600 on average, according to HomeAdvisor, but the cost varies based on your needs and home. Staging services range widely, from decluttering and depersonalization (for example, removing family photos or specific decor) to bringing in rented furnishings, repainting and more. Simply put, the more work involved to stage it, the more expensive the production will be. A real estate agent can help you determine which staging services would make an impact on your home’s value.
How to pay for home improvements to increase value
Whether you plan to sell your home or just want to enjoy it more while you live there, it’s important to consider how you’ll pay for these value-adding projects. You can work to save the cash to pay for home improvements as you go, but there are also plenty of financing options that can help you remodel your home sooner rather than later.
Personal loan
Personal loans allow you to borrow a fixed amount of money with a fixed interest rate. These loans are unsecured, meaning you don’t have to put your home or other property up as collateral to get approved. Many personal loan lenders let you borrow as much as $35,000 for home improvements — sometimes more — which you can then repay over time. The rates for a personal loan can vary widely, so be sure to compare options to get the lowest-cost loan for your project.
Home equity loan or HELOC
Home equity loans are similar to personal loans in that you receive a lump sum of cash with a fixed interest rate and fixed monthly payment. Home equity lines of credit, also known as HELOCs, work like credit cards, and come with variable rates and a line of credit you can borrow against.
These borrowing options require you to put your home up as collateral to qualify. The good news is, you could score a lower interest rate with one of these types of loans compared to a personal loan or home improvement loan. In addition, no matter which option you go with, the interest might be deductible if you use the money to make eligible home improvements.
0% APR credit card
If you need to borrow a small amount of cash for your home improvement plans, you might be able to skip the loan and go with a 0% APR credit card instead. Many cards have no interest payments on balances for up to 18 months, which can be ideal if you have a smaller-scale project in mind. A credit card can also work well if you’re able to pay your contractor with it.
Just remember: If you don’t pay your balance off by the time your zero-percent APR offer ends, your card’s interest rate will reset to a much higher variable rate, costing you more.
Cash-out refinance
If you have built equity in your home and you’re looking to do a major renovation, a cash-out refinance could provide you with the funds you need while getting you a lower rate on your current mortgage. The refinancing process is just as paperwork-heavy as taking out a mortgage, however, and there are closing costs to consider. If you go this route, take the time to shop around for the best refinance rates so you maximize your savings.
Improvements to increase value FAQ
Different renovations can have varying degrees of impact on your home’s value. Replacing your garage door, for example, might add more than $3,700 to resale value, while replacing windows can add more than $13,000.Rather than think about how much a renovation will increase your home’s value, it’s important to determine how much that renovation will cost to get a sense of what you will be able to recoup. The best projects are the renovations that retain most of their value in the eyes of a new buyer.
There are financing options that allow you to buy a home and pay for renovation expenses at the same time.For example, the Fannie Mae HomeStyle loan bundles the money you need to buy a new property and the money you need for renovations into one loan. The maximum you can borrow is 75 percent of the as-completed value of the home after the renovation. FHA 203(k) loans are also designed to cover renovations when buying a home, although there are some additional limitations with this route: A 203(k) loan can’t cover luxury add-ons like a swimming pool or outdoor fireplace.
You can make some major upgrades to your home with a $100,000 budget. For example, you might convert your attic into living space (around $40,000, according to HomeAdvisor), add a standard bathroom (around $35,000), a 50-square-foot mudroom ($12,000) and a simple sunroom (somewhere between $8,000 and $11,000).No matter what you decide to do to your home, you can stretch that $100,000 further by focusing on more affordable materials: lower-cost cabinets, cheaper wallpaper and non luxury finishes, for instance.
The time to complete a kitchen renovation depends on the size of the kitchen and the scope of the work.For example, if your plans include a new backsplash, a fresh coat of paint on the cabinets and a new dishwasher, the project shouldn’t take long — maybe a week or two. However, if your project involves rearranging the layout of the room, installing new electrical wiring, ripping up the floor and other major steps, be ready to order out (or move out of your house) for a while.What you want to accomplish isn’t the only factor, either. The current labor shortage and supply chain issues — stories of six-month delays for sourcing cabinets are common, for example – are stretching the timeline further.
Establish your goals. For example, is the renovation so you can enjoy the home for the foreseeable future, or are you aiming to increase the value and sell it in hopes of turning a profit? Then, create an outline of everything you want to accomplish, and get quotes from multiple contractors for the cost and timeline. You don’t have to go with the cheapest option; go with the one that is most reputable. Before you go too far down the path to starting the project, make a plan for what you’re going to do during the renovation. Will you be able to live there during the construction, or do your plans call for gutting the home? If you need to relocate for part of the project, it’s important to figure out how to minimize those short-term living costs.
