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Zillow reveals which renovations deliver the most bang for your buck

By Mike Wheatley | March 29, 2019

Home shopping season is quickly approaching, which means home sellers are busy cleaning, painting, decluttering, landscaping and deciding which other projects might reap the greatest reward given limited time and money. Their best bet โ€“ once the curb appeal projects are done, tackle the bathrooms.

The typical seller has 13 years' worth of wear and tear on their home, and that can make it tough to know where to start. But most of them do, with sellers averaging 2.2 renovations or improvements to prepare to sell their home, with 79 percent making at least one, according to Zillow data. And there's good reason to do that, with nearly a quarter of sellers who make improvements sell above list price, compared with 16 percent of sellers who don't.

The key is making smart decisions about what to upgrade, because home-improvement projects don't necessarily pay for themselves -- and some improvements actually cost more than they return in value. To help homeowners who are preparing to/thinking about selling their home, Zillow analyzed the return on a variety of projects and put together some tips to maximize return and minimize headaches.

A good rule of thumb: A smaller, inexpensive upgrade typically brings a bigger reward than a more involved and time-consuming one.

Here are a few items on Zillow's "Do" list for sellers looking to pocket the biggest payoff:

  • Dive into the "curb appeal" projects first, and do them smartly -- New paint inside and out and basic landscaping and yard care typically runs about $3,000, according to recent research by Zillow and Thumbtack, and are typically the most common and necessary improvements. And choosing the right eye-catching colors can increase a home's value far beyond just the appeal of new paint. A recent Zillow analysis found that yellow homes sell for nearly $3,500 less than expected, while the right color door can lead to an extra $6,000 in a seller's pocket.
  • Upgrade the bathrooms (but not too much) -- A mid-range bathroom remodel -- replacing the toilet, tub and light fixtures, adding a double sink, tiling the floor and hanging some wallpaper -- typically results in a $1.71 increase in home value for every dollar spent, if the bathroom is at least 25 years old. But an upscale bathroom remodel -- top-end features, full-body-wash shower wall, bidet -- will actually cost a seller, adding 87 cents of home value for every dollar spent.
  • Install new windows -- New mid-range windows can return $1.15 for every dollar, but get too fancy and you'll end up breaking even.
  • Pay attention to current design trends -- Warm modernism and organic accents are in, bold colors and an overtly rustic feel are out.

And some important "Don'ts":

  • Focus on the kitchen -- Kitchen renovations, at any level, are among the worst return on investment of the home improvements we studied, at about 50 cents on the dollar. Part of the reason is that the kitchen is one of the few rooms in a house where different people want different utility. You could spend $30,000 renovating a kitchen only to turn off some potential buyers who would have done it differently.
  • Bother with the basement -- The only renovation that paid off worse than a kitchen remodel was finishing a basement, at a bit less than 50 cents on the dollar, even if you add a bathroom.

"If you're fixing up your home to appeal to a variety of potential buyers, go for changes that have a broad appeal," said Skylar Olsen, Zillow's director of economic research. "Fresh paint in the new 'it' neutral signals a well-maintained home, and most people can imagine their own furniture matching the walls. A luxury chef's kitchen won't matter to the majority of folks who can't call themselves a good cook and just eat out often anyway. Sometimes the basement is best for storage. Start small and seek expert advice."

Mike Wheatley is the senior editor at Realty Biz News. Got a real estate related news article you wish to share, contact Mike at [email protected].
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