Should I Renovate Before I List My Home For Sale

Should I Renovate Before I List My Home For Sale?

If you have happened to watch any television over the past few years, you’ve no doubt noticed the explosion of the “house flipping” genre. In these shows, with titles like “Flip or Flop,” “Fixer Upper,” or even “Zombie House Flipping,” enterprising entrepreneurs buy dilapidated properties at bargain prices, renovate them, and then sell them, declaring fabulous profits on the deal.

With programming like this dominating the airwaves, it’s no wonder that many potential sellers wonder whether investing in a renovation might pay the kind of dividends it seems to for home flippers. If you’re wondering whether you should renovate before listing your home for sale, you’re not alone. Understanding whether — and how — to renovate before selling can help you maximize your return on investment when it comes time to sell.

When Is Renovating A Good Idea?

As with almost every investment decision, the answer to the question of whether to renovate is complicated, and depends on a number of factors. Understanding the market you’re in, the type of project you’re contemplating, the time it will take to complete work, and the potential buyers you’re trying to attract are all important considerations in determining whether to move forward with renovations.

Sellers in hot markets where properties receive multiple offers within hours or days of listing, for example, are unlikely to generate significant returns on renovations. Buyers in these markets are unlikely to be picky, and an updated bathroom or kitchen space probably won’t generate more or higher offers. On the other hand, buyers in slower markets, or buyers in markets with a lot of new construction, might appreciate a turnkey property that is fully updated. 

The type of work being contemplated is also important. Projects that repair serious issues, or issues that may become serious, can pay dividends. However, highly taste-specific remodeling, or remodeling that eliminates bedrooms or closets, is unlikely to add value, and may even diminish a home’s market value. In addition, longer-term projects that take weeks or even months to complete may make it difficult to list a house in an opportune market, potentially leading to a reduction in the price a property can command. Sellers should consider the timing of their sale and the time renovations will take to complete before entering into complicated or time-consuming renovation projects.

Which Renovations Offer The Highest Return On Investment?

If you are a homeowner considering a renovation project, understand that you may not recoup the full value of your investment upon sale. Depending on your sale timeline, the increased satisfaction you gain from your space may make the investment worthwhile. However, there are some areas in which investments are more likely to pay off than others.

Roof 

According to the National Association of Realtors 2019 Remodeling Impact Report, which analyzed the return on investment on 20 common home remodeling projects, a new roof is the most profitable investment a homeowner can make, with an average ROI of 107% of the homeowner’s cost. What’s more, 33% of agents surveyed believed that a new roof helped to close a sale. 

Roofing is a frequently-cited issue in home inspection reports, and a new roof can eliminate a major source of contention during the inspection and escrow process. Replacing a roof can make securing a buyer and closing a sale easier.

Flooring

Like a new roof, new wood flooring and refinishing existing hardwood floors tend to be high-ROI propositions, with new wood flooring securing an average 106% return on investment and refinishing projects recouping 100% of the seller’s investment. 

HVAC

If your HVAC system is old or in need of repair or replacement, having that work done before you list your home for sale may pay off. Homeowners reported that 85% of the cost of HVAC replacement was reflected in the ultimate sale price. However, replacing an HVAC system may not be a crucial repair, as only 7% of Realtors© surveyed reported that HVAC replacement helped close a sale.

What Projects May Not Be Worth The Cost?

Kitchen Upgrades

A new, updated kitchen is often found on buyer wish lists, and sellers may believe that transforming a home’s kitchen or adding upgraded appliances can pay off in a home’s sale price. However, the return on an investment in new kitchen finishes and fixtures may not be what a homeowner expects. According to the NAR Report, homeowners should only expect to see between 52 and 59% of their investment in upgrades or a complete kitchen remodel reflected in the sale price. What’s more, only 10% of Realtors© surveyed said that a complete kitchen remodel helped close a sale. Kitchen upgrades were slightly more helpful, with 20% of Realtors© reporting that upgrades to a kitchen helped close a sale. 

Closet Renovations

If you’re thinking about remodeling closets to appeal to potential buyers, understand that closet renovations have the lowest ROI of any upgrades studied by NAR, with owners recouping only 40% of their investment, and no Realtors© reporting that closet upgrades helped to close a sale. If you’re considering an investment to increase your home’s sale value, look to other projects to maximize your improvement dollar.

How Do I Know What Upgrades Will Help Me Sell My Home?

Knowing how best to invest in your home is a complicated analysis, involving an analysis of market conditions in your neighborhood, an objective look at your home, and experience in what will help sell to your target buyer. An experienced Baird & Warner agent can help you to understand how to upgrade the aspects of your home that are most important to the buyers you want to attract. Consulting with a knowledgeable agent is the best way to maximize your return on investment and improve your chances of a sale.

Shouldn’t Selling a Home Be Easier? 

There’s an art and science to selling your home. As the largest independent and locally owned real estate brokerage in Chicagoland, Baird & Warner is home to thousands of the most highly skilled real estate professionals in the area. Our brokers are hyperlocal experts who know just what it takes to prepare, market, and sell your home, while helping you navigate the process with ease at every step of the way. With mortgage and title services in-house and innovative partners who are as committed to giving clients the best possible service as we are… It’s just easier here.

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