6 Min Read | April 1, 2022
Smart Ways to Increase Your Home Value
These tips from real estate experts show ways to increase the value of your home without throwing money down the drain.
At-A-Glance
There are loads of home improvements and other real estate sales techniques that can increase the value of your home.
Some options are more cost-effective than others.
When you’re getting ready to sell your house, you want to be sure to get the best possible price. There are many ways to increase its value with home improvements and real estate sales techniques. Keep in mind that some options are likely to deliver a bigger bang for your buck than others, while quite a few could lead buyers to look elsewhere.
Home Value Factors You Can – And Can’t – Control
There’s only so much you can control when trying to sell your house, such as how it looks, what it might be missing, and whether everything is in working order. For example, you can usually spruce up your house’s “curb appeal” with some paint or shrubbery, to make the best first impression as buyers arrive. You could consider adding a second bathroom. And you should fix that leaky faucet!
Yet you are unlikely to have control over some of the biggest price factors in housing, such as your home’s location or whether you’re in a seller’s market or a buyer’s market. Even in these cases, though, you can apply some smart sales practices to increase the value of your home.
Whatever you choose to do, the impact will vary with location, age of your home, price range, and other factors. For instance, finishing a basement delivers up to a 10% increase on the value of a $500,000 home in Portland, Oregon, versus only about 1% in Atlanta, according to one online real estate marketplace.1
You may not directly recoup the total cost of any home improvement, according to Remodeling Magazine, though it can help package your house to meet buyers’ expectations and lead to a quicker sale.2 Real estate agents and home renovation contractors can help you decide what’s worth it. Many say that it’s better to make some upgrades early in your homeownership so you can enjoy them while you live there, as well as derive monetary value when you sell.
Below, you’ll find four different ways to boost the value of your home while preparing to sell it:
- Major renovations.
- Minor home improvements.
- Small tweaks.
- Simple real estate sales techniques.
Increasing the Value of Your Home with Major Renovations
Major renovations can give a big boost to your home’s value, but at what cost? The return on your investment can vary significantly, depending on the job and other factors. With online tools, you can begin to calculate what you’re in for.
Renovations that add to the square footage of your home (say, converting an attic or basement into livable space) usually deliver the most value, as does a bathroom addition, experts say. One online tool estimates that adding an upscale bathroom increases average resale value by almost $55,000.3 The thing is, it also reports an average cost slightly more than $100,000. Given those national averages, you might only recoup a little over half your costs.
The same tool shows that big jobs on the exterior of your home, such as adding a stone veneer, tend to recoup more of your investment (92%), whereas interior jobs such as a major upscale kitchen remodeling recover less (54%). Certain big ticket items, like swimming pools, can even put buyers off for various reasons.
The amount you recoup from home improvements varies not only by region or city, but also from neighborhood to neighborhood. It might not be wise to add a second floor with a majestic two-story foyer in a neighborhood where people are shopping for quaint bungalows. As experts say, “Don’t over-improve!” Buyers put a lot of faith in the price of “comparables” near your home, and they may be unlikely to go way outside that range. You can learn a lot by visiting the nearby competition during open houses.
The cost of some improvements can help lower your taxable gain if you sell the house. It works like this: The price of the improvement is added to your property’s “cost basis,” which is what you paid for it originally plus the cost of major capital improvements. When you sell, you deduct the cost basis from your selling price to get the taxable gain. All other things being equal, a higher cost basis results in a smaller gain.4
How Minor Home Improvements Increase the Value of Your Home
Minor renovations are often more cost-effective than major renovations, and the garage door provides a case in point. Replacing it can be relatively inexpensive, at a national average of about $3,900. It can increase that all-important curb appeal mentioned above. And according to a Remodeling Magazine study, it can deliver a 93% return on your investment, increasing your home’s price by about $3,660.5
Minor kitchen upgrades provide another example – say, replacing an old sink with a shiny stainless steel model, installing better faucets, adding a backsplash, replacing cabinet doorknobs, refinishing cabinet doors, or doing other relatively minor jobs.
Tweak Your Way to Increased Home Value
Presentation is considered essential to increasing the value of your home and to selling it quickly. And time is money, because your home can lose value if it languishes on the market, and because you may end up carrying two mortgages (including the one on your new home) as well as insurance and other costs.
Relatively small changes can keep buyers focused on what’s best about your home. At the same time, they can keep buyers from wondering whether a faulty light fixture, for example, is just the tip of an iceberg of dysfunction throughout the house. Small tweaks to decor may also keep them from being distracted by your purple-themed room or other personal design choices.
These tweaks are known as staging. Techniques include decluttering, painting, carpeting, recaulking, repairing, and taking other steps to improve the “little things” in your home. A professional home “stager” might bring in their own furniture and decorations for the open house, recommend you take down your family photos, and “neutralize” rooms so buyers can envision themselves there instead of you. It’s not uncommon for a staging investment of a few hundred dollars to yield several thousands in return.
Selling Tips that Can Help Mitigate Market Woes
Maybe you have to sell during a buyer’s market – or perhaps your home’s location is working against, not for, you. Experts have advice for these two important price pressures.
In a buyer’s market, it’s wise to highlight the advantages that your property has over the competition. Maybe it’s a combination of fantastic lighting, a bigger yard, and better schools. Similarly, if the real estate mantra of “location, location, location!” isn’t working in your favor – say, with the house next door in total disrepair – you can play up the positives in and around the neighborhood, such as a recent renaissance and reemergence of restaurants downtown.
The Takeaway
You can find lots of ways to increase your home’s value when you’re getting ready to sell. Consider home improvements that will not only get you a better price but also recoup enough of the money you put into them. And if you make the improvements early in your homeownership, you can enjoy them yourself.
1 “Which home improvements add the most value?,” Opendoor
2 “What the Numbers Mean,” Remodeling Magazine
3 “2021 Cost vs. Value Report,” Remodeling Magazine
4 “Which Home Improvements Add to Your Cost Basis?,” Millionacres
5 “2021 Cost vs. Value Report,” Remodeling Magazine
Karen Lynch is a journalist who has covered global business, technology, finance, and related public policy issues for more than 30 years.
All Credit Intel content is written by freelance authors and commissioned and paid for by American Express.
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