Even with for-sale homes flying off the market, getting top dollar for your house isn’t a foregone conclusion. Sure, it will sell as is, but if you want to maximize your profit, you may need to do upgrades. That’s especially true for many pre-retirees who have been in their homes for decades and are preparing to downsize. Dated paint colors, cluttered living spaces, and old cabinets and appliances can put off buyers, even if inventory is tight.
“A strong market means that buyers will take asking [prices], or even above asking, regardless of the look and feel of a home,” says Clayton DeKorne, chief editor at JLC Group, Zonda Media, a real estate market research firm. “That said, any disrepair, particularly on the outside, can be used as a leverage point to bring the cost of the house down.”
Depending on where you live, you may not have to replace kitchen cabinets or install hardwood floors to get top dollar in a sale, but there are some upgrades that will give you a strong return on your investment (ROI). Here’s a look at four of them.
1. Exterior upgrades
Nothing raises red flags more than an exterior that is old and weathered. Chipped paint, a busted garage door and siding in disrepair all raise red flags with would-be buyers. It’s the reason exterior upgrades tend to give homeowners a high ROI.
“The data in Cost vs. Value over the past 20 years shows overwhelmingly that for single-family detached homes, it’s the exterior replacement jobs — siding, the garage door, roofing — that tend to have the highest return on value,” DeKorne says. “Why? Psychologically, when a prospective buyer rolls up to a home that looks pulled together and in good repair, they walk into that deal with a positive impression of the home.”
Not convinced? Take a garage door replacement, for example. According to the Cost vs. Value index for 2021, nationwide it costs about $3,900 to swap out a garage door. The ROI: 93.8 percent. Installing manufactured stone veneers on the exterior of your home will get you a 92.1 percent ROI. And you’ll recoup 68.3 percent of the cost of replacing vinyl siding. If you replace windows in your home, you should get back about 68.6 percent of your investment.
2. Minor kitchen upgrades
When it comes to what home buyers care about, kitchens tend to be top on the list. Overhauling a kitchen, however, can be costly, especially if you have cabinets from the 1980s. Nationally, a major upscale kitchen remodel will set you back about $150,000, but the ROI is just 53.9 percent. Meanwhile, a midrange kitchen overhaul in which you’re shelling out about $75,000 gets you a mere 57.4 percent ROI. What does get you a strong ROI is a minor midrange kitchen remodel that doesn’t cost more than $27,000; with that option, you can recoup about 72 percent of your investment.
Would-be buyers can live with a move-in-ready kitchen that needs upgrades, knowing that someday they will make it their own. But if it’s already completed and not to their liking, it could be a deal-breaker. “Kitchens are the number one thing people look at,” says Trish Gesswein, director of listing sales at Houwzer. “Most people are interested in having updated kitchens. We are seeing a trend of people painting cabinets and adding backsplashes to keep costs minimal.” Replacing the hardware on cabinets can also modernize an outdated kitchen for budget-conscious homeowners.