Homeowners are constantly looking for quick tips on increasing the value of their home and an agent is the first person contacted for guidance. As an agent you must understand that value is relative, while one client may value a fast sale others may be looking at the numbers – the home’s market value.
Let’s take a look at value from both perspectives with regard to investing in a home. Investing in a home can be tricky and if investments are not thought out a homeowner can end up over investing and losing money in the process.
There are many types of improvements that can be made to increase the value of a home; however, expectations about the rate of return on any improvements need to be realistic. Bottom-line, a $200 ceiling fan does not equate to a home value boost of $200 – same goes for a new $3000 bathroom.
Prior to investing in any type of home improvements, home owners should be clear about their objectives and how to best meet or exceed their goals. There are many variables involved in home value and your client’s should be asking you the right questions before diving into home improvements:
What is the health of my local market? Providing your clients with recent market times of homes, recent sales, number of recent foreclosures and/or short sales or recent plans for a new condo project can give both buyers and sellers an idea about where the market is headed.
What are the standard finishes of the homes in my local market? The finishes of average homes in the local market will tell your client’s how much, or little, they should invest. Some examples of finishes can include the types of countertops and appliances in the kitchen, crown molding throughout the home, carpet vs. wood flooring or granite tile in bathroom(s).
What is the average bed and bath count for homes in my local market? When a home is appraised, homes with similar bed/bath count are used as a comparison for value – this is one of the vital components when determining value.
Educating your clients with market information can help guide them through the upgrade or renovation process and avoid over investing.
Let’s take a look at some improvements that may not add value, but can improve market time when selling, small improvements include:
New carpet or refinished wood floors
New light fixtures
Updated ceiling fans
New light switch plates
Fresh grout in bathrooms and kitchens
New interior and exterior door knobs
When looking for a big value boost here are four ways to knock it out of the park. This is where the local market information will really come in handy:
Room Addition: Adding square footage is a sure fire way to increase value -maybe a new den or additional bedroom. Be sure there are other homes in the area with comparable square footage.
Kitchen and Bath(s): These are the two areas where too much can be spent and what is desired may not be what’s best. If local market standard finishes are Formica and Frigidaire then granite counter tops and a subzero can result in the most expensive house on the block. While higher-end is safe, top of the line may result in very long market times and a loss on investment.
Heating and Cooling: If you are running window air units in the summer and radiators in the winter – installing central heating and air can give your value a nice boost.
New Deck: Your porch or deck will be compared to others in your area so if you are going to build a deck you should put some thought into the build. Take a look at the average size, look and feel of other decks in your area – while you don’t want to out-do the entire neighborhood nicer and slightly bigger will give you a nice bump in value.
Keeping your finger on the pulse of your farm’s market can help you guide sellers a buyers in an appropriate direction.