Whether you’re considering selling your home soon, or not, it’s a good idea to understand what improvements will provide a return on investment, and which could be a waste of your hard-earned money.
I often encounter people considering a move, and the immediate inclination is to fix everything, and worse, make improvements to the home because they think it will add value to the sale. In most if not all cases, those repairs and improvements will not even give you your money back, let alone add to your profit. Look at these results from the 2017 Cost vs. Value report below, showing you the local data, regional data, and national data. It’s remarkably consistent. See that report here.
In case you don’t have time to look at it, the average across the board is about 64% return on investment. For every dollar you spend on a home improvement project, you can expect an average of 64 cents back in added value. Sure, improving your home will add value, but if it doesn’t even return the money you spend on the improvement, maybe you should reconsider, based on how long you intend to stay there. If you spend $25,000 on a kitchen remodel (average 59.9% return), and it only adds $15,000 in value, and you’re getting ready to sell the home, you’re effectively leaving $10,000 on the table. Where could you go for $10,000?
That covers the financial side, but what about the emotional side? If you’re going to be in the property for several years, and you realize that your return on investment comes in the form of enjoying the upgrade, then make the decision that’s right for you.
However, if your motivation for spending the money is profit, save it…take a vacation.