Resale Value of Home Improvement Projects

Question: We are planning to put our home on the market this spring and seeking advice on home improvement projects to maximize our sale. What guidance do you have on home improvement projects with the best resale value?

Answer: The decisions you make about money you do or do not spend improving your home prior to a sale can influence your bottom line more than most other decisions you make during the sale process. They’re also the decisions you’re most in control of, so take your time and plan carefully.

Most Remodeling Projects Lose $$$ on Resale

Remodeling.com publishes an annual report showing the resale return of specific remodeling jobs, based on region of the country, and the 2022 report was published earlier this month. Unfortunately, I can’t share the DC-area report because of copyright issues, but it’s worth visiting the link yourself (they require some basic info).

The findings of their report show that the majority of projects (e.g. bathrooms/kitchen remodel, new roof/windows/siding), done individually, return just 50-80% of the cost. I have seen another study by Zillow that shows similar projections.

There are, of course, always exceptions to this guidance. For example, if most of your home has been updated except for one room/bathroom, you will probably get a much better return making modest improvements to the lagging space to bring it up to par with the rest of the home. Another example is improving something that is in exceptionally bad condition such as replacing old, rotting single-pane windows that don’t function and have air leaks; you’ll probably earn yourself close to or above 100% return on this work rather than the ~65% determined by the Remodeling.com study.

So when considering larger scale home improvement projects – kitchen reno, new roof, porch addition – it’s rarely a good idea to do this work strictly for resale purposes, but only if you’re going to realize personal value from it.

Should You Ever Spend on Listing Prep?

The study mentioned above is in reference to more expensive home improvement projects and does not include the most common (and profitable) work done for listing prep like painting, power washing, cleaning, landscaping, and flooring.

Prior to most sales, every homeowner should make a list of possible repairs and improvements and gather pricing for all worthy projects. If you plan to hire a real estate agent for your sale, I highly recommend doing this with your agent, who should have a good understanding of profitable vs unprofitable projects for your market/property type and have a team of contractors available to support the work. They should have a deep enough knowledge of buyer preferences, your sub-market, and project cost to prepare a set of listing prep recommendations based on your home and budget, rather than a generalized one-size-fits-all plan.

After you prepare a full list of potential improvements, you can bucket them in tiers and analyze each tier for cost, project timeline, and impact on the expected resale value to determine which improvements make the most sense. These tiers generally fall into three categories:

  • Clean-out, Clean-up: This focuses on the low cost, high return items to make a home more presentable such painting, deep cleaning, repairs, light landscaping, etc 
  • Bring up to par: Investing in one/some more expensive projects to bring them up to par with the rest of the home. For example, improving a dated bathroom if the rest of the home is updated so that the one bathroom doesn’t drag down the value of the other improvements.
  • Remodel/Homeowner Flip: Similar to what an investor might do to a dated home in an expensive neighborhood, a homeowner might choose to make a major investment into updates and benefit from a significant profit

Consider All Costs

The cost of doing improvements goes beyond the cost of the labor and materials. Don’t forget to consider things like:

  • Your time managing the work (note, a real estate agent will generally handle project management)
  • If you’ll live in the home during work, the inconvenience of having work done while you’re there
  • If you’ll move out before starting work, the carrying cost while work is being done
  • Risk of something going wrong during the work (applies more to larger projects)
  • Contingency budget for unexpected work that may come up during the project(s)

Always Seek 100%+ ROI

There’s no doubt that remodeling your kitchen will generate a higher sale price, but it’s rarely advisable to invest money into improvements if you won’t return more than 100% on the investment. Herein lies the challenge and strategy in planning your improvements. Understanding the profile of your likely buyers and what they value, plus other factors like market conditions and property type, is crucial to making investments that generate profit, not just a higher price.

If you’d like to discuss buying, selling, investing, or renting, don’t hesitate to reach out to me at Eli@EliResidential.com.

If you’d like a question answered in my weekly column or to discuss buying, selling, renting, or investing, please send an email to Eli@EliResidential.com. To read any of my older posts, visit the blog section of my website at EliResidential.com. Call me directly at (703) 539-2529.

Video summaries of some articles can be found on YouTube on the Ask Eli, Live With Jean playlist.
Eli Tucker is a licensed Realtor in Virginia, Washington DC, and Maryland with RLAH @properties, 4040 N Fairfax Dr #10C Arlington VA 22203. (703) 390-9460.

Landscaping To Improve At-Home Living

Question: We want to make our time at home more enjoyable by improving our outdoor space. What are some of the most common landscape/hardscape improvements you see in Arlington?

Answer: After six weeks in a row of Coronavirus market analysis/updates, I thought it would be a nice change of pace to talk about some ways you can improve your outdoor space to make staying at home more enjoyable. A nicely landscaped yard can also provide a strong return on resale, especially while stay-at-home orders are fresh in buyers’ minds.

To provide the best perspective on popular landscaping projects around Arlington, I asked Robert Groff of Groff Landscape Design, an Arlington-based landscape and hardscape firm, to share some of the most popular projects they do.

Thank you for sharing your insights Robert, take it away…

Thank you Eli and hello ARLnow. If all of this time at home has inspired you to invest in your outdoor space, I hope some of these projects are an inspiration.

April Showers Bring…Wet Basements and Mosquitos

We’ve all been reminded lately to be prepared for possible threats.  Now is the time to make sure rainwater is directed away from your home foundation and mosquito breeding grounds (standing water) are minimized.

Create Family Experiences

Patios – Patios are not only for dining and grilling anymore.  Patio activities can include yoga, outdoor office, study space, play space or even an outdoor movie theatre! With infinite amounts of material options here are our top recommendations:

  • Least Expensive:  Concrete Slab – In our region, concrete cracks but when necessary it absolutely has its place. 
  • Most Dynamic & Most Popular: Concrete Pavers.  We highly recommend Techo-bloc manufactured materials because of their lifetime warranty, density rating and wide range of colors, textures and styles https://www.techo-bloc.com/.
  • Favorite for Contemporary Style:  Porcelain Tile for Exterior Use https://www.architecturalceramics.com/portfolio/exterior.html.
  • Natural Stone: Flagstone is still extremely popular especially for our traditionalists!

Fire Pits – Fire pits can be wonderful, and they come in all shapes and sizes.  Consider if you want gas or wood burning.  How many times per year will you use it?  Would an outdoor heater be more beneficial to you? 

Vegetable Gardens – These can be excellent teaching tools for your children, and they can let you skip a trip to the produce aisle. They don’t have to be A LOT of work!

Playsets – With the public parks closed, maybe it’s time to get that playset for the kids.  Conversely, maybe it’s time to finally get rid of your playset to make space for a larger entertainment area or more usable yard space?

Lawn Space You Can Use – Many of us have muddy or sloped back yards. Grading, drainage solutions and tree trimming may all be pre-requisites before you add new grass seed or sod.

Fencing – Struggling to keep your eyes on the kids and work all day?  A fence could bring comfort that your kids are safe and sound.  Is it time for that puppy you have been considering?

Outdoor Kitchens –  Although popular, these can cost a pretty penny and sometimes quite frankly aren’t worth the investment.  Specifically, utility needs, countertops and custom appliances elevate costs quickly. Alternatively consider a “grilling nook” to re-locate your grill or smoker. This may increase counter space while creating a more aesthetically pleasing grilling station.

Grilling Nook
Outdoor Kitchen

Health & Wellness Space – If you need a clean and green place to get your yoga time in, consider synthetic turf. Benefits to turf also include no more muddy paw prints.  No more watering.   Plus, it’s easy to clean and dog friendly. 

Relaxation – With everybody home you may want to design a small get-a-way in a corner of the yard to go read a book, sip a glass of wine or simply phone a friend.

Replace your Vacation with Staycation

If you had to cancel your vacation plans this year, maybe it’s time to create a “staycation” in the back yard with any of the above elements.  Consider creating more privacy from neighbors, outdoor lighting for ambiance, an audio system so you can hear the waves crashing on the beach or perhaps a pool!  We don’t know when we’ll be able to travel safely again so perhaps vacation just needs to be at home for a while.

With so many options, let us help you pick & choose and make them a reality!  For outdoor living ideas you can also follow us on social media:   https://www.grofflandscapedesign.com/social-media/.

Arlington/Local Market Update

Thank you very much Robert! Before we wrap up this week’s column, I wanted to include a quick overview of Arlington market activity over the last week.

My colleagues and I are actually seeing more competition over the last couple of weeks both within Arlington and around the DC Metro. It seems like the decline in supply is outpacing the decline in demand and that buyers are starting to come back to the market who had taken a pause through the first few weeks of the COVID-19 outbreak.

There was a slight increase in the amount of new inventory coming to market in Arlington over the last seven days, but that was offset by an almost equal increase in properties going under contract.

Past Seven Days (Arlington) 
Seven Days Prior (Arlington)

If you’d like to discuss buying or selling strategies in this market, don’t hesitate to reach out to me at Eli@EliResidential.com. Be smart, be careful, be strategic. And stay home!