With the real estate market still in a slump, more and more people have decided not to sell their home. Instead, they have chosen to stay put, until things get better. I count myself in this group; I had my own home on the market for two years. My house sold, and the sale fell through, on two separate occasions. As a result, I’ve resolved to stay put until the real estate market improves.

However, now that I’ve decided to stay in this home instead of moving, I plan to make several home improvements to make my home more comfortable (e.g. building a sunroom to combat the dreary Michigan winters, and building a backyard deck).

Many home improvement projects don’t add value to your home, especially in a down market. In fact, some improvements can even detract from the asking price when you decide to sell. On the other hand, some projects can add significant value to your home.

So which home improvement projects should you invest in, and which projects should you avoid? Below are some helpful tips for home improvement projects that increase the value of your home, and home improvement projects to avoid altogether.

Before we actually talk about the different home improvement projects you should or shouldn’t do, let talk about money. No matter if you want to make big or small changes to your home, you need to have a way to pay for them. You can either save up the cash or use the equity you have in your home by using a home equity line of credit through a company like Figure.com.

7 Projects That Add Value to Your Home

Many projects do add value to your home, and improve your family’s quality of life. By working on these projects now, you can enjoy the benefits and updates. If you make green upgrades, then you can also start recouping your investment in these green energy technologies once you complete the projects.

Some home improvement projects that add value to a home include:

1. Remodeling the Kitchen

Most people consider the kitchen to be the heart of the home, and because of this, updates in this room pay off. According to HGTV, you can expect to recoup 60%-120% of your investment on a kitchen remodel, as long as you don’t go overboard. You should never make your kitchen fancier than the rest of the house, or the neighborhood.

Why You Shouldn’t Invest in a Deluxe Kitchen
For example, a historic home in my neighborhood has been on the market for more than two years. During the owner’s last open house, I went in to check it out, and immediately saw why the house hasn’t sold. The quaint Arts and Crafts style home was built in 1900 and has a lot of charm. Unfortunately, the homeowners had invested over $60,000 upgrading the kitchen.

The enormous kitchen, easily the size of the living room, features appliances and countertops that might look more at home in a fancy restaurant kitchen. The style, size, and quality of the kitchen don’t fit in with the rest of the house, or the neighborhood. If you plan on selling your home within the next five years, keep potential buyers in mind before you start on any major remodel; many people won’t pay for a fancy, deluxe kitchen.

A Little Paint Goes a Long Way
When it comes to how much you spend on a kitchen remodel, prices can run the gamut, from $5,000 to $75,000, or more. Get the biggest bang for your buck on a kitchen remodel by looking at color. Fresh paint, in modern colors, can go a long way towards updating the look of your kitchen. Plus, paint is relatively cheap.

You might want to consider using low-VOC paint; this makes your kitchen more eco-friendly, and helps your family avoid breathing in dangerous chemicals, like benzene, that off-gas from regular fresh paint.

Energy-Efficient Appliances
Replace old appliances with energy-efficient models. Energy Star-rated appliances are better for the environment, and they also help you save money, because they use less energy. Potential buyers often look for ways to save money when shopping for a new home.

If you’re looking upgrade your appliances to save energy, learn more about the the best time of year to buy large appliances.

2. Bathroom Addition

If your home only has one bathroom, you can recoup a large chunk of your investment by adding another one. HGTV estimates that you can recoup 80%-130% of whatever you spend adding a bathroom.

When it comes to finding room in your house for an extra bathroom, take a look at any extra rooms or underutilized spaces. Consider other spaces, such as closets or areas under the stairs, too. If you want a half-bath you need at least 18 square feet. If you want a full bath, including a stand-up shower, you need at least 30 square feet. If you want a bathtub, make sure you have at least 35 square feet to work with for a bathroom addition. See these bathroom design and remodeling ideas to get you started.

Like any project, the cost of adding a bathroom depends largely on the types of additions and accessories you want to use, and the cost of each of these items. You can save money by frequently checking Lowe’s and Home Depot; they often drastically reduce prices on sinks and toilets that have been floor models. You can also find great prices on tubs, doors, toilets, and fixtures if you shop at a Habitat for Humanity ReStore.

3. Reinventing a Room

Adding more square footage to your home with a new room can be an incredibly expensive project. Although you can recoup some of your investment, anywhere from 50%-83%, this project’s costs can quickly spin wildly out of control. Just turn on any of those home remodeling TV shows; projects that start off with a $15,000 budget quickly turn into $30,000 or more when homeowners and contractors run into unexpected problems.

Reinvent the existing space in your home to save money. Finish a basement, or convert the attic to a bedroom. Many homeowners can also add small apartments in, or over, their garages – which they can then rent out as a room.

Before you demolish walls and rafters, try to think about the ways that you, and potential buyers, can use the space:

• Versatile rooms have greater appeal to potential buyers.
• Basements frequently work well as second living rooms, or game rooms. Many people also turn this space into a small apartment for an aging relative or a tenant.
• Attic spaces often work well for craft rooms and game rooms, especially if they have high ceilings. If you have kids, you can add swings to the rafters, and create a cool play room just for them.

According to Remodeling Magazine’s annual Cost vs. Value report, an average basement remodel, with the addition of a wet bar, costs $64,000. You can save a significant portion of this by doing the work yourself, but even then, adding a new room can be expensive.

4. Adding Energy-Efficient Windows

These days, buyers shop for homes with energy efficiency in mind. Old, drafty single-pane windows are a major turn off. Energy Star claims that adding Energy Star-rated windows can save you up to $500 a year in heating and cooling costs by making your home more energy efficient.

According to HGTV, you can expect to recoup 60%-90% of your costs when you invest in energy-efficient windows. You can also receive a green energy tax credit of 10% for this upgrade, as long as you install Energy Star-rated windows. You might also qualify for additional credits from your state, or even your utility company.

Learn more about available offers and rebates in your area by visiting the Energy Star Rebate Finder. They have a searchable database that gives you specific information for your state. Just make sure you check “windows” so you get product-specific information. I searched for energy-efficient rebates in my zip code and discovered that my utility company, DTE, offers rebates to customers who install Energy Star windows.

Energy Star estimates that the average cost of window replacement in an average-sized home costs $7,500-$10,000, or more. If the new windows save you several hundred dollars a year, and you recoup a tax credit, you can eventually recoup your investment.

5. Deck Addition

Adding a deck increases the value of your home. Outdoor living spaces have become more desirable, especially since more people stay home for vacation (i.e. referred to as a staycation). If you make your deck and your backyard more appealing, your house will be more appealing to prospective buyers when you decide to sell. HGTV claims that homeowners recoup 65%-90% of their investment by adding a deck.

The cost of adding a deck to your home varies widely. Everything depends on its size, and how many bells and whistles you want added, like built-in seating, multiple stairs, built-in flower pots, and the size of the deck. Decks can cost anywhere from $1,200 to $10,000, or more. Again, it all depends on the design and materials used.

As you might guess, you can save a huge chunk of the cost, usually half, by doing the work yourself. Keep in mind, however, that deck construction isn’t easy. You need specific tools, such as a bandsaw, and the cost of the tools can be very expensive, especially if you don’t plan to use them again.

If you decide to hire a contractor, shop around before you choose someone to work with. Make sure you get at least three quotes, with specifics, from the contractors you interview. Thoroughly check references for the contractors before you agree to a contract or work order, and watch out for home improvement repair scams. Sites like HomeAdvisor or Angie’s List can ensure you hire a contractor you can trust.

6. Energy-Efficient Insulation

If your home lacks basic insulation, and has old doors that let in plenty of hot and cold air, home inspectors working with potential buyers will include this in their reports. Homes that haven’t been modified with energy efficiency in mind cost more to live in and maintain.

Updating your home to save energy doesn’t have to cost a lot of money and can make your home more appealing to potential buyers. You can save $2,500 or more each year just by making some changes. For example, you can add extra insulation to your attic for $200 or less, and this small change can save you hundreds each year on your utility bill.

Seal cracks around the house to save even more money on energy costs, and to make your home more appealing to buyers. The U.S. Department of Energy (USDE) estimates that the average house has enough leaks to equal a 3×3 foot hole in the wall. You can find leaks in your home during the winter. Anytime you feel a draft or cold spot, you’re in an area that leaks air. You can purchase a thermal leak detector for $40 or less (e.g. Black & Decker TLD100 Thermal Leak Detector). These handheld devices alert you to temperature differences around your home. This then allows you to add caulk or insulation where you need it the most.

You can often discover leaks, and areas that need more insulation, in these areas:

• Around doors and windows
• Around electrical sockets and light switches
• In recessed lighting
• Around the attic hatch
• In the basement
• Anywhere ducts or wires go outside the house

Another easy retrofit is to use CFL light bulbs in all light fixtures. CFL bulbs use 75% less energy than traditional bulbs and each one saves, on average, $40 in energy over the course of its lifetime. You also save on cooling costs because CFLs emit 75% less heat than traditional bulbs. You can easily calculate how much you can save simply by counting the number of lights you have in your home.

You can also install a programmable thermostat. Most buyers expect to see programmable thermostats these days, and they can save you money. Energy Star estimates that installing a programmable thermostat will save the average homeowner $180 per year in heating and cooling costs.

If you need to replace your hot water heater, consider spending a bit extra to purchase a high-efficiency water heater. Savvy home buyers know these water heaters can really trim energy bills. If you use less than 41 gallons of water each day in your household, a tankless water heater saves you 24%-34% on your water heating costs. If you use more, count on a savings of 8%-14%.

7. Basic Updates

Basic updates add the most value to your home. Keep the paint fresh, fix the roof when it leaks, replace wood that rots, and get rid of any mold that you find. These types of chores keep your home from deteriorating over time. Buyers want a healthy, solid, safe home, and they look carefully for signs of routine maintenance.

I’ve replaced the electric wiring in my home, repainted the outside, replaced the plumbing, and repainted the interior. These projects keep my home in tip-top shape so that when I do decide to try and sell again, buyers will see a well-cared-for home.

10 Home Improvement Projects to Avoid

If you plan on moving in two to three years, don’t invest money in home improvement projects that won’t increase the resale value of your home.

Some of these low-value home improvement projects include:

1. In-Ground Swimming Pools

In-ground swimming pools cost $30,000-$75,000, depending on the type of pool installed. While installing a pool may seem like a good idea, a swimming pool makes your house more difficult to sell. Many people, especially families with small children, do not want to buy a house with a pool. Eliminating families with small children drastically reduces the number of people willing to buy your home. In addition, installing a pool increases your energy costs, and raises your homeowner’s insurance. A swimming pool also requires a lot of maintenance, and usually costs around $1,000-$2,000 or more to operate.

Pro tip: If you make a large upgrade to your home, it’s suggested that you reevaluate your homeowner’s insurance policy to make sure there is enough coverage. It’s also a great time to compare costs to make sure you’re not paying too much. Allstate Insurance is known for their auto insurance but they also have great rates for homeowners insurance.

If you live in Southern California, the Deep South, or in the sunny Southwest, a swimming pool may positively impact your home’s value. You may recoup, at most, 30%-50% of your investment in a pool. If you live anywhere else, however, installing a pool may decrease the value of your home, due to the significant operating costs.

Invest in a pool if you plan to stay in your home for several years and use it often. Otherwise, a new pool can cause some significant financial headaches.

2. Gourmet Kitchens with High-End Accessories

While you may love your $10,000 commercial stove, and top-of-the-line Tuscan tiles, these costly additions don’t pay off when you list your home for sale. If you plan on moving within the next 3-5 years, and you want to remodel your kitchen, invest in quality, serviceable appliances that appeal to many people. In general, too much customization in a home turns buyers away.

Stay on par with your neighbors; too many high-end additions and you will own the most expensive home on the block. You can recoup a fair amount of money on a kitchen remodel, but expensive, fancy gourmet kitchens don’t help you attract that perfect buyer.

Of course, if you have a high-end home in an upscale neighborhood, then upgrading your kitchen to “gourmet” status may increase its value, since buyers expect to see a gourmet kitchen in a high-end home. But even in a high-end home, you may not recoup your entire investment in an expensive kitchen remodel when you sell your home.

3. Whirlpool Baths

It may sound fun and relaxing to take a hot bath after a long workday, but potential buyers will not pay extra for a newly installed whirlpool bath. In addition, the costs for installing a whirlpool tub can be prohibitive. Many homeowners install luxury bathtubs, only to discover they need to invest in a larger hot water tank for the tub to work properly. Furthermore, installing a tub may result in high energy bills, and additional monthly maintenance costs.

Think twice before installing a whirlpool bath. This project can cost you thousands of dollars, and if you run into problems, the costs climb even higher.

 

4. Sunrooms

This home improvement project goes straight to my heart; I really want a sunroom. Unfortunately, this expensive project adds very little to a home’s value. A sunroom only recoups $486 for every $1,000 spent on construction, or 49%-59% of the initial investment. In addition, glass doesn’t provide insulation, so a sunroom also raises energy costs in the winter and summer.

We ultimately decided not to add a sunroom to our home, since we know it won’t add to the value of our house. However, if you live in the South, or on the beach, where many homes have sunrooms, adding one to your home may actually help you stay competitive when and if you decide to sell. Plus, adding a sunroom to your home may make your house more attractive to a specific group of buyers, but you probably won’t recoup construction costs.

5. Expensive Landscaping

Landscaping can transform the way your house looks, especially to potential buyers. However, going over the top to create a backyard paradise, while nice, won’t add to your asking price. If you plan to stay in your home for a while, this project can improve your quality of life, especially in the warmer months. If you plan to sell your home, you won’t recoup the cost of expensive landscaping in the sale.

Instead of investing in expensive landscaping, make changes to your lawn to add curb appeal to your home. “Wow” potential buyers with a well-kept lawn, and some well-laced shrubbery or small trees. The Cost vs. Value report states that projects that boost the “wow” value of the front of the house recoup a decent percentage, depending on the changes made. Go for classy, subtle changes to the landscaping to really make your home shine.

6. Room Additions

Adding a room to your home can easily cost thousands of dollars. If you build a new master suite, you might see a 66% return on your investment. If add a family room, expect a 62% or less return on your investment. Many budget-minded buyers don’t want to heat and cool a huge house.

However, adding another bedroom to your home is the only exception to this rule. An extra bedroom makes your house appealing to a whole new group of buyers. Save money on renovations by dividing a large space with a wall, in order to form an extra room. In order to qualify as another bedroom, the room will need some other additions, including a window and a closet. You can also consider bedroom interior design ideas on a budget.

Your builder can help you navigate complicated building codes to determine the requirements for building a bedroom. If the room doesn’t qualify as a bedroom for the real estate listing, list the new space as a bonus room instead.

7. Home Office Remodeling

Most people don’t need luxury home offices. The average home office renovation costs around $28,000. You will receive about a 46% return on investment for this pricey remodel. Technology quickly becomes outdated, so investing in new wiring, and other home office components, won’t generate additional income at the time of the sale.

Most people only need good lighting, and room for home office furniture like a desk and a chair. Unless you work at home full-time, you may want to skip this upgrade.

8. Roof Replacement

We replaced our roof last year. When we listed our house, I thought we could raise the asking price by $6,500, to include the cost of the new roof. It hurt when our realtor told us we couldn’t raise our asking price to cover the cost of the new roof. A brand new roof was another feature we could add to our listing, but raising the sale price of our home was out of the question.

Roofs do need replacing eventually, and the consequences of waiting could be very costly, including ruined walls, mold, and mildew stains. Most experts say you only receive 55%-60% of the cost to replace a roof when you sell your home. Conversely, a damaged roof or an old roof may turn prospective buyers away. A new roof can make your home look crisp to prospective buyers, and help you stay competitive in the market.

9. Garage Additions

According to the Cost vs. Value report, homeowners who build a garage see a 62% return on investment. A garage addition can cost tens of thousands of dollars. Knowing that you only recoup a fraction of your investment, don’t build a new garage to increase the value of your home.

If you plan on staying in your home for a while, then a garage can greatly contribute to your quality of life. After all, you’d have someplace to park your car, and store your lawn and sports equipment. If you currently store these items under a carport or in a shed, a garage might sound like a great investment.

10. Necessities

According to real estate experts, some necessities, including a new septic system and new plumbing, do not generate more income when you sell your home. Buyers want to know that the sinks and toilets work, but most of them don’t concern themselves with the specifics.

A costly backup power generator might interest to buyers living in an area fraught with tornadoes or hurricanes. Otherwise, a new generator does not add value to your home.

Final Word

You have many options for home improvement projects that add value to your home. Remember that home improvements don’t pay off like they did in 2004-2005, when the housing market peaked. If you plan to remodel, concentrate your efforts on smaller projects that make your home more appealing to budget-minded buyers. Focus on energy efficiency and small upgrades that add character and comfort to your home. Uber-luxury has become passé.

Did any upgrades you made to your house pay off when it came time to sell? What home improvement projects will you work on this year?

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