What is the best home improvement to add value? Homeowners constantly think about making improvements, whether it be upgrading the kitchen, adding hardwood floors, a new patio, finishing the basement, etc. There is a never-ending list of things that homeowners want to do to improve both their enjoyment and the value of their homes. The top home improvement to add value is to fix things that are broke and take care of eyesores.
Ignore what you see on HGTV or from that contractor at the Home & Garden Show. While most upgrades will increase the value of your home, only a few are likely to provide a positive return on investment and they need to be done in an economically minded way. I will dive into that in another article.
The absolute most overlooked part of any home is the general mechanical and structural condition of the home. These inspection items play a crucial role in the home selling process even though they cannot really be seen to the untrained eye. Buying or selling a home is as much of an emotional experience as it is a financial one and mechanical condition is especially important to a potential Buyer, here is a real-life example:
A home goes on the market for $500,000 in a decent area of town and brings in multiple offers the first weekend and you accept an offer for $520,000…you think alright $20k over asking! Now here comes the inspection and the inspection report comes back and it is not pretty, it is a long list of items and it is so long that the Buyer is worried about what is missed and the home being a money pit and backs out.
Now you go back on the market and every agent asks, “why is it back on the market?” Your agent does their best to dodge the question meanwhile their Buyers are asking “what is wrong?” You are mad because you would have fixed everything, but you did not even have a chance and now your home has this stigma that must be danced around for every home showing.
Now we move on to the next Buyer who was able to get past the stigma and the market is still hot so they offer $500,000 and you accept…but it was so quick you did not have a chance to fix the items that were broke, you just want the house sold! Inspection comes up and it is the same list of items with the major item being a new furnace/AC for $15,000. You feel this is unfair as it is only 15 years old and you could have fixed it for $2,000, but the Buyer is worried about the age of the furnace and the repairs it needs.
If the furnace were fixed it would have never come up in inspection and they would have moved on. You do not want to go back on the market again or wait 3 weeks to fix the furnace and you agree to the concession. Your $520,000 home sale turned into $485,000 due to not maintaining the general mechanics of the home and it took longer to sell because it went back on the market!
The return on investment of making repairs prior to a home sale is about 5-10x your money and I see that consistently. In the above example a $3,500 investment would have brought an additional $35,000 in home value. If you think this is an extreme example, I assure you it is not extreme, it is typical.
We all have small problems with our homes that we ignore, and we ignore it to the point that we forget about it. Most inspection problems are small, but when they compound on a list it scares a Buyer. Just think how you would react to a long list of items on an inspection report of an older home…you think Money Pit!
If you have a nice home, but you are unsure about the condition of your home or inherited from someone who has passed, have a home inspector come out before listing it to better prep it for sale. These cost about $400 and will provide for a much smoother sales experience.
Please contact me with any questions about your particular home improvements and I will help you find the best home improvement to add value.
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