Planning to sell your home but unable to decide on renovations? Or, perhaps you want to renovate but have no idea where to start? Look no further; this guide will help give you the clarity you need.
Renovations are a big dilemma for most home sellers. Get it right, and you’ll position your home for top dollar. Get it wrong, and you’ll have essentially burned your money.
Ultimately, you’re selling your home to get a good return, right? So, considerhome renovations as a necessary and totally strategic decision based on Return on Investment (ROI) and marketability. (After all, this isn’t Love It or List It—you’re not making over your property just to stick around in the end. You’re doing what makes the most sense to sell for the highest amount possible.)
Should you renovate your home?
Before answering this question, know when it makes sense to sell your property ‘as-is:’
- When a job transfer is imminent
- When you must move due to personal reasons
- When you can’t afford renovations
- When your buyer is a real estate investor, especially the flip-and-fix type, and you’re happy to accept a full cash deal
The drawback with selling ‘as-is,’ of course, is that you typically get far less money than you would after a property makeover.
Let’s debunk some common renovation myths that cause sellers to decide against it:
Myth 1: Most buyers do the renovations themselves
Sellers often believe that buyers would want to makerenovationsthemselves, in order to have things exactly the way they like them. But the truth is, many are simply too busy with their jobs and families to DIY the whole thing. For this reason, they’re willing to pay top dollar for move-in-ready homes.
Also, consider this: renovating a home post-sale means that a buyer may have to rent another property for a while during construction, and that’s an inconvenience that wouldn’t appeal to some folks.
Myth 2: Home renovations take time
Some sellers hesitate to undertake renovation projects because they think it’s too time-consuming. Some remodeling projects indeed take time, but hiring an expert team will greatly accelerate the process without compromising on quality.
Because remodeled homes sell quicker than those sold as-is, in the end, property makeovers are often worth the hassle and expense.
Myth 3: Home makeovers don’t impact your profit margin
Most of the time, this is patently false. Yes, some undervalued home renovations won’t necessarily add to your profits, most of them do. (For example, with a master suite addition, you can only recoup 47.7% of the cost.)
According to a National Association of Housing Builders survey, 87% of buyers cited a laundry room and exterior lighting as priorities in a property. If you can make those available, your home’s price will most likely increase…and so will your profit after the sale.
Choosing therenovations from the buyer’s perspective is thus essential. This is where taking the suggestion of a professional and experienced listing agent comes in handy.
Home elements worth renovating
As established in the previous section, the choice of renovations can make a ton of difference in getting a good price for your home, which also impacts the return on investment (ROI). But apart from exterior lighting and laundry rooms, what other elements are worth remodeling?
Use these five renovation tips (including some low-cost fixes) to attract buyers.
Though decluttering is not an update or renovation per se, it opens up your home’s features for buyers to see clearly. For instance, you can pack away old clothing, toys, etc., in a storage facility. Organizing garages, closets and other storage areas gives the appearance of more space. And removing personal tchotchkes from around your home will help buyers see themselves in it, instead of ogling your family photos or, say, your very niche collection of prized porcelain figurines.
Think of it as a form of mental home staging. Decluttering helps prospective buyers visualize their living situation in your property. This, in turn, helps them to close the deal faster.
2. Open up your floor space
Gone are the days of compartmentalized rooms and walls aplenty. There is a clear preference among today’s buyers for open floor layouts. They want to move seamlessly across the home, and why not?
According to NAHB, 85% of buyers desire an open space between the kitchen and dining room; 79% between the kitchen and family room, and 70% between the family room and dining room. An open layout is especially practical for families of young children, who need to be within eyesight of their parents.
It also allows you to be more creative with your space. Consider tearing down a wall to allow more natural light, maybe? Or perhaps, hiring a staging expert to place your furniture strategically, which might further open up your property’s floor plan?
3. Increase curb appeal
Appearances matter when it comes to real estate.
A home with good curb appeal will leave a lasting impression when a prospective buyer pulls up. Consider repainting your home’s interior and exterior, or at least the front door. You could either choose neutral colors that are easy on the eyes, or go with a bold hue that pops (a maroon or burnt orange are popular options). Moreover, explore these expert choices of colors for 2022 to make your home stand out.
Another way to amp up the curb appeal? Add low-maintenance landscaping, which typically includes:
- removing high-maintenance trees or plants
- edging grass along the sidewalk and driveway
- mowing your lawn and trimming any hedges
- installing landscape lighting
Hire a landscaping professional for additional support if needed.
4. Make energy efficiency a top priority
Buyers find significant value in having energy-efficient home appliances, considering the amount of savings they offer. You might replace old appliances with ENERGY STAR-rated ones; if you’re curious about which might give you the most bang for you buck, homebuyers’ most desired product is the ENERGY STAR-rated window.
Take into account the fact that energy efficiency standards vary across the country depending on the climate. What works in Vermont may not be considered energy-efficient in California, for example. Thankfully, the U.S. Department of Energy has put up a handy online guide for energy-efficient windows.
5. Don’t neglect the backyard
For many buyers—especially in warmer climes—thoughtfully designed outdoor space is as important as a property’s interior. For roughly 82% of homebuyers, a patio is a must-have outdoor feature in a home.
According to kiplinger.com, the installation of a concrete patio costs anywhere between $1,600 to $4,200. It’s a comparatively low maintenance feature to have in a home, but this small change amplifies the property’s value. Buyers immediately envision summer bar-be-ques, taking in the aroma of springtime blossoms, and entertaining friends and family in their own outdoor venue.
Minor fixes that are a ‘must’ to address
It’s often minor issues that cause a deal to fall through. Some of those low-cost minor fixes you might need to address include:
- Faulty wires – Did you know that electrical and lighting equipment such as wiring, plugs, cords are the third major reason for home fires in the United States? Any potential buyer would want to address electrical issues before moving in. And if you take care of them by fixing damaged junction boxes, frayed wiring, faulty light switching, or any other wiring issues, you’ll help yourself in closing a deal quickly.
- Plumbing issues – Water leaks due to plumbing issues lead to mold, which is not only unattractive but also unsafe. You can prevent this issue, though—and it typically only costs around $75-$135 per hour to hire a plumber.
- Cosmetic repairs – You don’t want to lose a deal due to minor cosmetic issues such as a broken tile. Yes, some buyers are that specific. Other examples of cosmetic repairs include replacing cracked pavement, worn-out carpet, and fixing loose handrails, among others.
Hiring the right contractor
Now that you’ve decided to renovate your home, what’s the next step? You can start by hiring a contractor or a team of contractors according to your project’s scope.
While a general contractor handles many renovations (fixing a broken built-in wardrobe, for instance), some makeovers require additional assistance. For instance, if the home’s overall layout needs a change, you’d require a licensed architect’s services. If you want to remodel your kitchen, then you’ll probably need to bring an interior designer on board as well.
Finding a contractor
There are many ways to find contractors who fit the bill, such as:
- Ask for recommendations or references
Your agent most probably has a list of contractors. Ask them who they recommend, whether they’ve worked with them personally or have had past sellers refer them. Also, your family and friends could provide references if anyone has recently undertaken a home renovation project.
But, be diligent and do your research before picking anyone.
- Search online marketplaces
You can search for contractors on online platforms such as Sweeten, Houzz, and Angie’s List. These platforms provide a list of local contractors from your area. As you go through the profiles and read their information, be sure to check out the reviews thoroughly to see what others are saying about them.
- Scour the neighborhood
You can take your search into 4D. Drive around your neighborhood to find construction crews working on other properties. This way, you can assess their work firsthand and if you like what you see, you can ask for their contact details directly. Apart from that, you can also visit local home supply stores and lumberyards to find contractors. (Some will advertise in these establishments, and the staff may have recommendations as well.)
Choosing a contractor
A good rule of thumb is to pick no fewer than three contractors as a set of a finalists. How should you go about that?
- Conduct interviews
Be it via phone, email or face-to-face, you can ask questions that help you determine:
- Whether they are capable of taking on a project of your scale
- Their previous clients’ experience and satisfaction levels (provided they give you references)
- Their years of experience as a contractor and specific background with projects similar to yours
- What other projects they’re currently working on
- Ask for bids
Give the contractors your renovation details, along with any home blueprints as needed, and if possible, have them stop by your property in person. Then ask each for detailed bids consisting of project costs, their profit margins, and an anticipated expenses breakdown. Comparing these will help you understand how each contractor is thinking about your project; note that if the bids are vastly different, simply going with the cheapest one may not be the wisest idea. In the words of This Old House general contractor Tom Silva: “Throw out the lowball bid. This contractor is probably cutting corners or, worse, desperate for work.”
It’s better if the bid amounts are somewhat similar, as this indicates that the contractors selected are on par in terms of quality and their perception of the project scope. An active contractor will readily provide details.
- Inquire about payment terms
Just how much will their require upfront? Contractors should have the ability to pay for the initial costs of a renovation project.
While some ask for a downpayment, especially for larger projects, others will require payment in installments upon completion of key milestones. Do ask in advance about their payment schedules to ensure a seamless collaboration.
- Find out if they’re comfortable signing a contract
It’s not uncommon for contractors to delay a project in the absence of the seller’s oversight. Signing a contract that includes a clear payment schedule, defined project timeline, a waiver of your liability for personal harm or injury incurred on the jobsite and related workers’ compensation will protect you against significant delays in completing your home renovation, as well as other liabilities.
Reputable contractors (that is, those who aren’t just hobbyists) will have a version of this contract that you can review and possibly have an attorney look over prior to signing.
Maximize your returns with renovations
If you’ve made it this far, you know how home renovations play an critical role in increasing your property’s sale price and your eventual return on investment. That said, if you approach property makeovers haphazardly, you could lose money rather than earning it.
The many sources and methods of choosing specific renovations that we’ve covered in this comprehensive guide—as well as finding the right contractors to bring them to fruition—will help you take the strategic route instead.