Home Renovations With the Highest ROI

One of the most common questions we hear from homeowners is “what renovations add the most value to a home?” This is an especially pertinent question for homeowners thinking of selling their home and hoping to maximize return on investment (ROI).

Unfortunately, there is no simple answer to this question. The value of a home upgrade will depend on a number of ever-fluctuating factors such as buyer demand, quality of the repairs, price of materials used, and the state of the housing market. Where you live also plays a big role, since homeowners in different regions value different features. A pool installation in Minnesota may not fetch as much interest as one in, say, Florida.

At Sundae, we emphasize maintaining the original character, style, and charm of every home, and we believe it’s possible to add value without breaking the bank. Here are some tips for how to get the most bang for your buck when making home renovations.

Start with most desirable: kitchens and bathrooms

Upgrades to kitchens and bathrooms are typically a great starting point for renovations because they’re one of the first things buyers notice. Today’s buyers love open kitchens with room to both cook and entertain. They also frequently look for extra storage space, and a layout that’s easy to move around, clean, and maintain.

Bathrooms also offer smart upgrade opportunities, especially master bathrooms that provide an extension to the master suite. In general, outdated kitchens and bathrooms turn off many buyers and can hold up a sales process or drive down the price.

Watch out for: Master bedrooms that share one bathroom with other bedrooms. If possible, give the master bedroom its own bath.

Configure the space for a more efficient floor plan

Reconfiguring the floor plan to improve the flow of a home can make a big impact, especially in older homes with choppy layouts. Open concepts and large uninterrupted spaces are very popular at the moment.

This includes common areas like kitchens and family rooms as well as large master bedroom suites with lots of space to spread out.

Watch out for: Disconnected kitchens. Modern families often want to cook, eat, and entertain all within one seamless common area.

Extend living area to the outdoors

At Sundae, we see that many home buyers are interested in livable outdoor spaces. This means patios, decks, fences, walls, landscape design, lighting, and shelters are all worth considering to create a place where people can enjoy spending time outside. Putting money into a backyard remodel tends to add good resale value to a home.

Keep in mind, however, that outdoor spaces carry risk, as any hardscape or substantial outside upgrade needs to be well-constructed and able to endure the elements.

Watch out for: Low quality materials. While outdoor renovations can bring a solid ROI, they also have a higher standard of quality. Rain and sunshine will quickly destroy cheap materials and erode home value.

Focus on first Impressions

Generally speaking, anything that directly impacts the aesthetic appearance or curb appeal of a home is likely to provide a good return. Homebuyers remember the most glaring areas of the home, especially the front exterior, from the moment they pull up to the house.

This means upgrades like paint, siding, new garage doors, lawncare, or window improvements can be great investment decisions to grab attention.

Watch out for: Updates that fundamentally change the bones of the house. Before replacing anything original to the house, see if you can restore it first.

Read more: How to give your home some interior design love the Sundae way

Quick home improvement projects that pay off

Don’t limit your efforts to comprehensive renovations. Homeowners can also get a lot of value out of smaller, incremental improvements to the house. This is often where we see the biggest opportunity for low-cost, high-payoff updates.

Here are some quick, high impact improvements to consider:

  • First things first: clean the house! You may be surprised at how much newer the interior will look after scrubbing it from top to bottom. A thorough cleaning shouldn’t cost more than a few hundred bucks.
  • Address any health or safety issues (i.e. mold, exposed wires, loose railings, etc.) or items not up to current building codes. These are immediate red flags to buyers and can come up during inspections and delay a sale.
  • Painting: a low cost but critical upgrade. A fresh coat of paint will go a long way to improving the appearance of any room. Don’t forget the ceilings.
  • Update lighting fixtures. This quick improvement can be made for a very low price relative to the total home value. Good lighting makes a home feel less dated and helps show it better.
  • Trim and clean up the yards. Simple landscaping improvements and outdoor cleanup are an easy fix that makes a big difference in the mind of the buyer since they are noticeable before you enter the home. They’re also much more affordable than an outdoor construction project.
  • Consider staging if you’re planning to sell your house. It’s not a renovation, but professional staging for vacant properties can dramatically improve the appearance and help increase the sale price.
  • Don’t ignore the little stuff. Perhaps the most cost-effective way to increase your home’s value is to fix the little stuff. Cracked walls, leaky faucets, and broken light bulbs can add up to an impression of a broken down home. These can be addressed quickly and cheaply.

A word of caveat

Whatever you decide to do, it’s important to keep your options open. Renovation projects are expensive, complicated, and time-consuming affairs. A lot can go wrong, especially if you don’t know what you’re doing.

If you’re considering an upgrade to increase the resale value of your house, the math might work better if you skip the repairs and sell the house to an off-market buyer, as-is. Not only will this allow you to avoid the time, cost, and stress of renovation, but after all costs are factored in, you may see higher net proceeds from the home sale.

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Josh Stech

Sundae's co-founder and CEO, Josh has a history leading companies that operate at the intersection of real estate and technology. Prior to Sundae, Josh was Founding Partner and SVP of Sales at LendingHome, and before that, he was Co-Founder and CFO of Purpose Built Investments. Josh graduated with honors from Stanford with a BA in Economics, BA in Spanish, and an MA in Latin American Studies with a focus in Economic Policy.