How Home Improvements Impact Home Value

By Angie Sisk, M&D Residential Director

As the housing market continues to grow, it has become increasingly important for homeowners and real estate agents to understand how home improvements can impact home value. Homeowners often make home improvements to improve their living conditions or for personal preferences, but it is also essential to consider the potential resale value of the home.

I have seen firsthand the impact that home improvements can have on a property’s value as a licensed realtor and residential director at M&D Real Estate. Whether you are a real estate agent looking to help clients make wise investments or a homeowner looking to increase the resale value of your home, understanding the relationship between home improvements and home value is crucial.

Not All Home Improvements are Created Equal

First and foremost, real estate agents should advise their clients that not all home improvements are created equal when it comes to increasing a property’s value. Some upgrades tend to have a higher return on investment than others, and it’s important to prioritize these upgrades to maximize the property’s value.

For example, kitchen and bathroom renovations are known to have a high return on investment as they improve the functionality and aesthetics of the home, making it more appealing to potential buyers. Upgrades like replacing outdated cabinets, countertops, and fixtures, and installing new appliances can significantly enhance the value of the property. Similarly, bathroom upgrades like replacing old tiles and fixtures, or adding new ones can enhance the visual appeal of the space and make it more attractive to buyers.

Adding square footage to a home can also increase its value if the addition is well-planned and seamlessly integrated into the existing structure. Additional bedrooms or living spaces can make a home more appealing to families or those looking for more space.

A well-planned addition can not only increase the living space, but it can also enhance the overall layout of the home. It is essential to ensure that the addition aligns with the design and style of the original structure, and that the materials used for the addition are of good quality and match the existing structure.

The Importance of Location

Real estate agents should also note that the location of a property can also greatly impact the value of home improvements. For instance, if the property is situated in an area where home prices are already high, such as in a desirable neighborhood or a city center, expensive upgrades may not necessarily lead to a significant increase in the property’s value. In such areas, the property’s location and the local real estate market may already command a premium, and costly upgrades may not provide a proportional return on investment.

Conversely, if the property is in an area where home prices are more modest, such as in a less-desirable neighborhood or a rural area, some upgrades may not be worth the investment. No matter where the property is, it’s important to assess the current condition of the property and compare it to the housing market in the area. If the property is outdated or in poor condition relative to the market, some upgrades may be necessary to make it more attractive to buyers.

Ultimately, real estate agents should carefully evaluate the local housing market and the property’s location to determine the most cost-effective upgrades that will provide the greatest return on investment. By doing so, they can help their clients make informed decisions about home improvements that will increase the property’s value and appeal to potential buyers.

Understanding the Real Estate Market

In addition to considering the location of a property, agents should also understand the current state of the real estate market. In a seller’s market, where demand for homes exceeds supply, even minor home improvements can make a property more attractive to potential buyers. Agents should advise their clients to focus on low-cost, high-impact upgrades that will make their property more appealing to potential buyers in this type of market. Such upgrades may include cosmetic improvements, such as repainting the walls, refinishing the floors, or updating the kitchen and bathroom fixtures.

On the other hand, in a buyer’s market where there is more competition among sellers, larger and more substantial upgrades may be necessary to set a property apart from others on the market. In such a market, buyers have the advantage and sellers must work harder to make their property more attractive and competitive. Agents should advise their clients to focus on upgrades that will distinguish their property from others on the market. Such upgrades may include major renovations, such as adding a room, updating the roof, or installing energy-efficient features. Additionally, offering incentives, such as closing cost credits or home warranties, can also make a property more appealing to buyers.

Avoid Over-Personalized or Trendy Home Improvements

While certain upgrades can increase a property’s value, it’s important to avoid over-personalized or trendy upgrades that may not appeal to a wide range of potential buyers. Unusual design choices may be off-putting to some buyers and could decrease the value of a property. Instead, homeowners should opt for neutral and timeless upgrades that are more likely to appeal to a broader audience.

For example, natural textures are a design element for homes that never goes out of style. For more valuable and timeless home design trends, take a look at this post from M&D’s residential blog.

Invest in Your Career as a Real Estate Agent

As a real estate agent, it’s important to be knowledgeable about the impact of home improvements on home value and to help clients make informed decisions about which upgrades are worth the investment. By focusing on upgrades that provide the most return on investment, homeowners can increase their property’s resale value and attract potential buyers. Real estate agents must stay up-to-date on market trends and the latest home improvement techniques to provide clients with the best possible service.

At M&D Real Estate, we believe in investing in our agents by providing ongoing training and support, as well as cutting-edge technology and a dedicated marketing team to help them succeed. Whether you’re an experienced agent looking for a new opportunity, or a newcomer to the industry looking to learn and grow, we invite you to join our team and experience the M&D Real Estate difference.

Read more articles on the latest tips, tricks and trends for real estate agents here at the Art of Real Estate Blog.

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