Like anyone who owns their home, Austin homeowners are likely looking for any way to add value to their most valuable possession: their home. That’s especially the case given the state of the housing market, with normal property appreciation hard to come by. The topic of adding value to your home is tricky, though, as it’s not quite as simple as it sometimes seems on the surface.
Adding value to your home versus increasing the price tag of your home
Last year my wife and I converted the existing open air carport of our older Ranch style home into a standard two car garage with an automatic garage door opener. When showing the finished product off to friends and family, the standard remark was “That really added a lot of value to your home.”
I mostly nodded and smiled in agreement, but in my head I was thinking “Unless you’ve been pawing through our receipts and bank statements in the filing cabinet you really can’t know whether that’s true or not.” I wasn’t being snarky (well, in my head at least) or condescending; I was being practical and honest.
Lots of home improvement projects will increase what you might possibly sell your house for, but surprisingly few projects actually add value to your home. It might seem like I’m splitting hair and playing word games but it’s a very important point, especially when you’re deciding what home improvement projects to tackle.
Let’s say your house is worth about $150,000, and that’s what you’d get today if you put it on the market. You decide to upgrade your stuck-in the-1970s kitchen and go for a high-end remodel, with granite countertops, maple cabinets, top of the line appliances, the whole nine yards, with a final bill of $25,000.
Now you list your home for $175,000, which it sells for. You pat yourself on the back, having added $25,000 in value to your home. Or did you? Your net profit didn’t change, even after the new gorgeous kitchen was added. You got an extra $25,000 when you sold the house, but you spent an extra $25,000 before selling the house. You increased the price tag of your home, but you didn’t add any value.
Pretend instead that you painted the interior and exterior of your house, with an amazing color scheme your interior decorator cousin picked out for you. You did the work yourself and spent about $750 on paint and supplies. Your freshly-painted, sparkling house sells quickly for $155,000.
In that scenario you most definitely added value to your home, spending an extra $750 but selling the house for $5,000 more, for an additional profit of $4,250. Much of that added value came from your willingness to tackle the painting work yourself, but that’s just part of the home improvement game.
To be fair, our kitchen example actually was a good upgrade as well, despite the fact that it didn’t technically add value to your home. Some upgrades and home improvement projects may not add value, but they can help you sell your home much more quickly. It’s a terrible idea to try to sell a home with a leaking roof, even if a new roof won’t add extra value. Breaking even on necessary upgrades to sell your home can be a victory in and of itself.
Projects that add value to your home
As far as the sorts of projects to tackle to add value, many share the common theme of being DIY-friendly and involving low cost materials. Painting, tiling, and landscaping are some of the best choices, as they’re well within the reach and budget of the average homeowner.
Look for very visible projects, as the added value really comes from the emotional appeal to buyers, encouraging them to spend a little more when they think “Wow, that looks really nice.”
Adding extra insulation in the attic may make the most economic sense as far as upgrades, but a potential buyer never sees it or responds to it. They definitely, however, see the new plants you added by the front walkway as they smile appreciatively and already imagine themselves living in your home and trimming the rose bushes each year.