Before your clients spring for a home makeover, it pays to know which ones result in the highest return on investment. So, here are a few projects worth investing time and money in.
Before your clients spring for a home makeover, it pays to know which ones result in the highest return on investment. So, here are a few projects worth investing time and money in.
Last year, house flipping was on the rise, reaching its highest point since 2006. And although flipping rates dipped in 2020, “profits and profit margins increased” in the second quarter, according to an Inman article.
Of course, investing in fixer-uppers is tricky. That’s why it pays to know what upgrades have the best return on investment (ROI) before making any moves.
Although statistics vary by region and survey, here are the top five projects with the highest ROI.
1. Installing hardwood floors
According to the National Association of Realtors (NAR), the average ROI is 106 percent for new floors and 100 percent for refinishing. All to say, having good, solid flooring can really boost the appeal of a home and make it more attractive for future homebuyers.
When it comes to choosing the type of flooring, both solid hardwood and engineered wood will yield a favorable ROI. It comes down to what would work best for your clients’ location and climate. According to Home Flooring Pros, homesellers should go for “engineered wood for humid locations, engineered or solid hardwood for dry climates.”
If your clients want to refinish their old hardwood flooring, it’s always best to pursue this while it’s still in good condition. Encourage them not to wait until the flooring is heavily damaged.
2. Remodeling the kitchen
The kitchen has always been a treasured space within a home — and it’s an even more important now that the pandemic has caused more families to stay indoors, cook and congregate there. So, any updates a homeseller makes here always pays off.
However, advise your clients not to go overboard with their makeover. A minor kitchen update can yield an average of 98.5 percent ROI, according to FortuneBuilders. Plus, having a kitchen that looks fancier, cleaner and more modern than the rest of the house (or even the neighborhood) can also make it look out of place.
Also, homesellers should consider installing new stainless steel or copper appliances. In a recent HomeLight survey, top agents said “buyers are about 50 percent more likely to put an offer on a house with stainless steel appliances than a house without them.”
3. Bathroom addition
We’ve already discussed one of the most integral rooms in a house, and the second is, of course, the bathroom. According to HGTV, “Springing for a kitchen or bath remodel is a sure-fire investment, often returning more than 100 percent of the cost.”
That’s why homesellers should think about remodeling their bathrooms. Even a minor remodel (which returns an average of 102 percent) — like, springing for a rain shower, upgrading the lighting and swapping out the vanity — is something homebuyers are very likely to appreciate.
4. Sprucing up the landscaping
Since the onset of the coronavirus, more and more homeowners have been rolling up their sleeves and sprucing up their landscape — all in an effort to boost their homes’ curb appeal.
Creative landscaping not only increases the aesthetic appeal of a home, it also increases its chances of sale. NAR’s 2018 Remodeling Impact Survey Outdoors listed “landscape maintenance” and “upgrade” as two of the highest ROI projects (100 percent and 83 percent respectively).
Landscape maintenance translates to a mowed lawn, neatly pruned shrubs and other outdoor features. An “upgrade” includes things like installing a natural flagstone walkway, adding stone planters or planting a handful of flowering shrubs and mature trees.
5. Upgrading the roofing
According to the 2019 Remodeling Impact Report from NAR, new roofing can recover 107 percent on average. As far as exterior projects go, Realtors ranked the appeal of new roofing to a homebuyer as the highest on the list. Not to mention, 33 percent of them said “the project helped close a sale.”
Real estate professionals are networkers by trade, developing relationships over the years with all sorts of business owners and service providers. Brokerages are increasingly providing “concierge” services to help sellers make nonstructural upgrades prior to sale.
Oftentimes, the brokerage will cover the cost of the repairs to be repaid when escrow closes or when the listing expires, whichever comes first. This is something homesellers should consider.
SOURCE: Inman