A promising increase in real estate activity for the first half of 2015 has prompted hopeful home buyers and sellers to pull their heads out of the sand and have a look around. Buyers in some markets are finding a lack of inventory, which has encouraged sellers to ask more for their homes than they have been able to expect in many years.
But if you plan to put your home up for sale and think buyers are desperate enough to pay top dollar no matter what its present condition, think again. In many markets, your home may be competing against a fair amount of foreclosures finally hitting the market. You are not the only reseller. Investors and house flippers position themselves to scoop up, fix up, and then clean up on those bargains.
To reel in buyers, you may need a bigger boat – or at least comparable bait – to what house flippers use. Keep in mind that renovations do not have to be top of the line – just par for your neighborhood, up to code, and properly executed. The last thing you need to do is spend excess money you don’t know for sure you can recoup.
Before you get too excited about glamorous remodels and the home’s cosmetic appeal, attend to any necessary repairs – inefficient heating and air conditioning, damaged flooring, ancient plumbing and wiring, or leaky roofing – and update exterior eyesores like rotted siding, broken concrete, and dead bushes.
Once you’ve covered the basics, consider undertaking some of the following desirable home improvements that experienced house flippers make before putting homes on the market. ROI estimates are based on data from Remodeling Cost vs. Value Report for 2015.
1. Kitchen remodel.
An outdated, dysfunctional or dilapidated kitchen requires a makeover. Areas you want to focus on include cabinets, appliances, counters, flooring, lighting, and backsplash. The best way to save money? Don’t change the layout. Reface cabinets if they are in good condition. If replacing, use stock cabinets. When in doubt about finishes, white cabinets are still pleasing current buyers. Save by installing nice laminate countertops in a faux stone finish instead of real stone – the buyers can replace them if they have other ideas – and change outdated light fixtures into modern ones or give them a new finish with metallic spray paint. Go for an overall transitional look that accommodates both traditional and contemporary furnishings. Remodeling Cost vs. Value Report for 2015 reports that a minor mid-range kitchen remodel of slightly less than $20,000 returns 79.3 percent of your investment while a major mid-range remodel of $56,768 sees only a 67.8 percent ROI.
2. Bathroom renovation.
Grungy bathrooms turn off prospective buyers. Inexpensive updates include a new white toilet, sink and tub fixtures, sparkling mirrors, and glass shower doors (or at least a new, clean shower curtain) and vanity with storage. A coat of fresh paint and added shelving are a plus in small bathrooms. Minor bathroom remodels costing about $17,000 return 70 percent of investment – nearly as much as major bathroom remodels costing close to four times that.
3. Attic conversion.
If your attic meets code requirements for conversion, this remodel can add needed living space to a smaller home for typically a lot less than a structural addition. Increasing the number of bedrooms is a crowd-pleaser. A mid-range attic bedroom conversion runs about $50,000, and you can recoup an average of 77 percent.
4. Replacement windows.
A lot of heat exits and enters your home through your windows, so if you want to give homebuyers one of the things they look for these days – energy efficiency – give them new double- or triple-pane replacement windows with low-e coating. Popular frame materials include both vinyl and wood. Both offer more than 70 percent return on investment. If you’re undecided whether to choose wood or vinyl, take a look at other replacement windows in your neighborhood to see what’s most popular where you live.
5. Curb appeal.
Landscape improvements, exterior paint, new siding, or even something as inexpensive as a new entry door can make that all-important first impression of your home a good one. Siding replacement, either foam-backed vinyl or fiber-cement siding, offers an average of 80 percent ROI for mid-range or upscale projects that cost between $12,000 and $18,000. A new steel entry door may return more than 100 percent for an average investment of around $1,200.
Smart house flippers keep renovations low-budget. They shop for bargains, keep color choices neutral and design changes conservative for wider appeal. Don’t go overboard. As unbelievable as it may sound, many house flippers spend as little as $5,000 total on all upgrades. They know that if the house looks cosmetically refreshed, the home buyers can start with a basically blank canvas and make the upgrades that they want, because, truthfully, who ever knows for sure exactly what homebuyers want?