As the real estate market continues to evolve, so too do the ways to add value to your home, whether you’re making upgrades to a home you plan to stay in for a while or one you’re looking to sell soon. Here, you’ll find current recommendations to maximize the value of your home. As industry trends develop and we gain new data about the best ways to increase home value, we will continue to update this article with the latest information.
Before you begin any home renovation project, you’ll want to understand the expert strategies that drive value to ensure the best results. Let’s dive in!
Key factors that influence home value
To assess your home value, there are several critical factors to consider. While every buyer weighs these factors differently, they all color buyer perception and can impact how quickly your home sells—and how much buyers are willing to pay for it.
- Location
You’ve probably heard the adage “location is everything” when it comes to choosing where to live. It’s a major consideration for home buyers based on their unique needs, but there are also primary indicators that savvy home buyers keep in mind (and appraisers use to determine the value of a home):
- Quality of local school district
- Employment opportunities
- Proximity to shopping, entertainment, and recreation
- Neighborhood comps
An easy and impactful way to estimate your home’s value is to compare sale prices of homes similar to yours in the neighborhood. This is the top metric most real estate agents rely on to calculate a home’s value. When analyzing local comps, it’s important to factor in key differences between your home and one that has recently sold. Luckily, there are easy-to-use tools (like ours) that you can access to make this part of the valuation process simple. - The local market
Depending on the number of properties for sale in your neighborhood and the number of buyers searching in your area, your home value can be impacted. As you might assume, selling in a seller’s market gives you a higher chance to sell your home for more since more buyers are competing for fewer homes on the market. When selling in a buyer’s market, it’s likely that you’ll have to adjust your selling price to attract more buyers. Market conditions also impact how long it takes your home to sell. Homes that are on the market longer can be perceived negatively by buyers. - Home size and usable space
Of course, the more space a home offers, the higher price they may be willing to pay. A home’s value is roughly estimated in price per square foot, however the price a buyer is willing to pay per square foot is anything but standard. The usable space within a home is the most important factor in determining value for both buyers and appraisers. Bedrooms and bathrooms typically hold the highest perceived value, so the more usable space available in these rooms, the higher your home will likely be valued. - Age and condition
Unsurprisingly, newer homes are typically assigned a higher value by appraisers. But it isn’t just about modern, updated cosmetic features. Essential functionality features like roofing, electrical, plumbing and appliances are also weighted heavily. When these features are in newer condition, they are less likely to need to be repaired or replaced quickly and therefore represent potential savings for the buyer upfront. Today, most buyers—and particularly millennial buyers—are willing to pay top dollar for move-in ready homes that require little to no immediate repairs or upgrades. - Modern upgrades
Particularly in older homes with outdated features, updating certain details can add value. Return on investment for these upgrades vary based on the local market and your existing home value. For less expensive homes, prioritize essential upgrades like kitchen remodels and bathroom upgrades for the most value impact. More expensive homes can benefit most from higher ticket upgrades like pool additions or premium finishes, like marble countertops and solid wood flooring, and appliances with high-end tech integrations. - Economic indicators
Supply and demand is critical for the real estate market. When employment rates drop and wage increases slow, buyers’ ability to afford a home decreases as well. Be mindful of the broader economy and consider how the current economic status will impact home sales and price appreciation in your area. This is particularly important when deciding when to put your home on the market. - Interest rates
When it comes to affordability, interest rates impact home values more generally. Mostly, they’re important to factor into your assessment because of their influence on a buyer’s ability to pay top-dollar for a home. When interest rates increase, fewer people can afford to purchase a home and therefore it affects how much you can sell your home for. Short-term interest rates can impact buying power if a buyer has credit card or short-term loan debt, where higher interest rates make payments more expensive. Long-term interest rates can make mortgage payments less affordable as they rise, which is a major consideration in the home buying and selling process.
To make the most of your home’s value through upgrades, keep in mind that the key is to save money while you add value. Spending more on upgrades does not always guarantee proportionately higher returns, so it’s important to create a strategic plan that strikes the right balance so you’re investing in the right type, level, and amount of upgrades to maximize your returns. Depending on your budget and existing home value, these are the upgrades that can make the biggest impact.
Fresh paint: Walls, cabinets, and trim
A simple, cost-effective upgrade that makes a massive impact, paint can completely transform an outdated space and make it feel fresh and inviting. In fact, fresh paint has shown to earn sellers a 152% ROI (Homelight, 2024). And painting isn’t only reserved for updating your walls; add a few coats to cabinetry and trim, too, for a fully refreshed look throughout the home.
Declutter and deep clean for a refreshed look
Speaking of low-cost, high-impact upgrades, a clean home is essential. Few things can deter a home buyer quicker than a messy, cluttered space. Not only does it make it more difficult to envision how they would use each room of the home, but it also raises concerns about pests, mold, water damage, and other maintenance issues that may be hiding under the surfaces of the property.
Energy-efficient fixes: LED lighting, weather stripping
With just a few inexpensive adjustments, you can make a home more attractive to today’s buyers. Energy-efficient solutions like swapping out incandescent bulbs for LED lighting and weather stripping for better insulation can add value by reducing future energy costs upfront for potential buyers.
Landscaping enhancements: Mulch, plants, and edging
Curb appeal matters, and simple landscaping upgrades can make a big difference in buyer perception. Make a better first impression by adding plants like small trees, shrubs or flowers to walkways and plant beds and finish with mulch and clean edging for low maintenance upkeep.
Updating house numbers, mailbox, and exterior fixtures
Take your curb appeal up another notch by making sure features like the house numbers, mail box, and other exterior fixtures are in good cosmetic condition and any functions are working properly. This extra attention to detail shows potential buyers that the home has been well cared for, which can help them envision their life in it even more easily.
Energy-Efficient and Smart Home Improvements That Increase Value
Installing energy-efficient windows and doors
- Energy efficiency is a top priority for today’s buyers, both for the environmental impact and the energy cost reduction benefit. High quality, well-insulated windows and doors are a significant piece of the energy-saving puzzle, so this is the first place you’ll want to focus to ensure your home offers these benefits to buyers.
- Installing New Windows
The installation of new windows is equally as important as the windows themselves. If not installed correctly, issues like air leaks and water damage are more likely. For quality installation, energy-efficiency, and longevity, we recommend working with certified window installation professionals.
Upgrading HVAC systems for better efficiency
- Keep your HVAC running efficiently for you and future buyers by investing in a high-efficiency system and integrate a smart thermostat for optimal temperature settings and programmable scheduling. Look for ENERGY STAR certification or opt for geothermal powered systems for the highest energy impact and savings.
Replacing toilets and fixtures with low-flow models
- Low-flow toilets help homeowners save on water usage, lowering utility bills and conserving local water resources. These models also improve septic system performance for fewer plumbing issues down the line.
Adding solar panels or alternative energy solutions
- Depending on where you live and the amount of sunlight in your region, solar panels can be a great investment. While they come with higher upfront costs, solar panels can offer significant savings on utility bills over time and tax incentives through the federal solar tax credit, both of which will be transferred to buyers when they purchase the property. Depending on your state, you may also qualify for rebates and property tax exemptions, waived fees, and expedited permits.
Integrating smart home technology for security and convenience
- Like with smart thermostats, smart home technology in security and convenience features can add to your energy savings through remote control and scheduling, to ensure essential features are running properly and only when needed, even when you aren’t home.
Curb Appeal: The First Step to Increasing Home Value
Professional landscaping to create a polished look
- For the best first impression, get your yard in peak condition with professional landscaping experts. Not only will this enhance your home’s aesthetic appeal, but a landscaping professional will have the knowledge to design a yard that meets your water usage and maintenance needs for easier upkeep that will benefit you and future owners.
Pressure washing driveways, sidewalks, and siding
- It sounds simple, but it makes a big impact. Pristine driveways, sidewalks, and siding are important for impressing buyers and attracting more people to want to see inside during open houses and showings. A pressure washer makes this task even easier.
Exterior painting for a fresh, updated appearance
- Depending on the quality of paint and application, color choice (yes, really!), and the overall condition of your home, fresh exterior paint can increase home value by 2–5%, with an estimated ROI of 51–55%.
Adding a driveway or off-street parking for added convenience
- When your lot size allows, adding a driveway or off-street parking can be a significant value driver, particularly for cities and heavily car-dependent areas.
Home Improvements That May Not Add Value
As you can see, there are plenty of improvements you can make that add substantial value to a home. However, there are a few upgrades that may seem like big value adds, but actually tend to cost you more in the long run with minimal returns.
- Swimming pools: High maintenance, limited ROI
Unless you’re in a neighborhood where most homes include swimming pools, this addition may cost more than its worth in value. Not only is it expensive upfront, but regular maintenance can be a cost many buyers don’t want to inherit when they purchase a home.
- Luxury upgrades that don't match the neighborhood
When we talk about strategic upgrades, this is a key factor we look to. In a neighborhood with luxury-priced property values, luxury upgrades typically make sense. But homes in neighborhoods with lower price points bring more profit when you focus your improvements on essential upgrades.
- Removing bedrooms or converting garages to living spaces
Instead of adding value, removing bedrooms can actually decrease a home’s value and significantly lower your ROI. Updates like garage conversions can also yield lower ROI because they are less universally sought after.
- Over-customized renovations that may not appeal to buyers
It’s important to remember that too much customization can actually lessen a property’s appeal to buyers. You want to present a home in good condition that offers a blank slate for prospective buyers to imagine themselves living in.
Financing Home Improvements
Before diving into any home improvement project, you should assess your budget and explore funding options if necessary to create a plan that optimizes your ROI. Here are the top financing options available:
- Home equity loans and HELOC options
- Personal loans and 0% APR credit card strategies
- Cash-out refinancing for major renovations
- Setting a renovation budget that aligns with potential ROI
Preparing to Sell: Prioritizing the Right Upgrades
- Quick, cost-effective fixes vs. full renovations
The “right” renovations really depend on your unique situation. With all home improvements, we recommend prioritizing ROI to ensure that you get the highest value out of your upgrades. So depending on your local market, home size, and condition, your situation may vary. However, it’s usually a safe bet to prioritize quick and cost-effective fixes that focus on improving key areas of the home versus taking on larger projects that are more costly and time consuming.
- Appraised Value vs Market Value
The appraised value of a home is determined by a professional real estate appraiser’s inspection of the property at a specific point in time and can change over time based on the market. Market value is ultimately determined by buyers, based on various market forces and economic conditions, and is dependent on how much they are willing to pay for a property. Market value is also largely influenced by supply and demand.
- Staging your home for maximum buyer appeal
Once your home improvements are complete and you are ready to put the property on the market, you’ll want to stage the home to attract buyers and influence higher offers.
- Staging Bathroom to Impress Buyers
Often overlooked, bathrooms are a key area for potential buyers. To make the best impression, be sure to deep clean every surface, organize and declutter any bathroom items present, maximize lighting by upgrading fixtures or cleaning windows, and add luxury touches like plush towels and candles for a relaxing, inviting atmosphere.
- Staging Kitchen to Impress Home Buyers
As the top room that influences buyers decisions and the centerpiece of the home, it’s important to present your kitchen in the best possible light. Decluttering is key to showcase the full potential of the space. Clear countertops of unnecessary items, leaving only essential, aesthetically pleasing small appliances and simple decorative elements to help homeowners envision their future kitchen design style and functional use.
- Virtual Staging vs. Real Staging
Staging is a great way to show off a home’s strengths (and conceal any weaknesses) during showings. Now, we have virtual staging options that allow you to produce images that incorporate furniture, artwork, and other design elements digitally. This is a quick and cost-effective option that provides buyers with the freedom to try on different design styles and layouts in the space to inspire their future decor decision. Traditional staging, in contrast, is more time-consuming and expensive due to furniture and decor costs. However, this option allows prospective buyers to physically interact with the space, which helps to build a stronger emotional connection that largely influences decision-making in the buying process.
- Understanding market trends and buyer preferences
When planning your home upgrades before a sale, you’ll want to consider current market trends and buyer preferences. It’s important to do thorough research through well-known real estate authorities and local trend insights to know what’s most popular with buyers in your area—and what upgrades will bring you the most value.
- Getting a professional appraisal to guide your renovation strategy
For the most reliable and strategic approach to your renovation, rely on real estate experts to guide your decisions. A professional appraisal will help you understand exactly how to maximize your property’s value and help you take the right steps throughout the renovation process.
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