In today’s competitive real estate market, strategic home upgrades can make all the difference when it comes to attracting buyers and maximizing your home’s value. Not only do the right improvements enhance your property’s appeal, but they also offer a strong return on investment (ROI), making them a smart financial decision.
At The McKay Group, we believe in empowering our clients with the knowledge to make informed home improvement choices. Whether you’re planning to sell soon or simply want to add value to your property, understanding which renovations yield the highest returns can help you prioritize your efforts effectively.
Understanding the Impact of Home Improvements on ROI
The relationship between home improvements and ROI is crucial for both buyers and sellers. For sellers, strategic upgrades can attract more buyers and lead to higher offers. For buyers, knowing what improvements add value can help them make informed purchasing decisions. When potential buyers walk through a home, they aren’t just evaluating the space—they’re envisioning their future in it. Even minor upgrades can yield significant returns by enhancing a property’s appeal and making it more marketable.
The key is to focus on improvements that resonate with buyers, ensuring they see the value in your home from the moment they arrive. According to the 2024 Cost vs. Value Report by Remodeling, which analyzes the costs and resale values of major home renovations across the U.S., several remodeling projects can significantly enhance your home’s worth. The report highlights eight key projects that deliver the highest returns on investment, with three offering a remarkable ROI of 10
0 percent or more, meaning they can pay for themselves when it's time to sell or refinance.
Notably, exterior replacement projects tend to outperform indoor discretionary renovations in increasing sale prices. Because they enhance curb appeal and provide protection against the elements, these updates make a strong first impression on potential buyers. If you’re planning to list your home, these renovations should be at the top of your to-do list. They’re also valuable for increasing your home equity or simply improving your living space for long-term enjoyment.
1. Garage Door Replacement
Average Cost: $4,513
Average Resale Value: $8,751
Cost Recouped: 193.9%
Replacing your garage door is one of the most cost-effective home improvements you can make, nearly doubling in value compared to the previous year. This upgrade involves removing and replacing a 16-by-7-foot garage door with a modern, four-section door installed on heavy-duty galvanized steel tracks while reusing the existing motorized opener. A sleek and functional garage door not only enhances curb appeal but also reassures buyers about the home's upkeep. With an impressive return of nearly 194%, this is one of the rare renovations that can actually pay for itself, and then some, when it's time to sell.
2. Front Door Replacement
Material: Steel
Average Cost: $2,355
Average Resale Value: $4,430
Cost Recouped: 188.1%
Your front door is one of the first things potential buyers notice, making it a crucial element of your home's curb appeal. Replacing an entry door—particularly with a steel one—has seen a significant increase in return on investment, now offering an impressive 188% ROI. This boost is likely due to the dual benefits steel doors provide: improved aesthetics and enhanced energy efficiency. Unlike traditional wood doors, steel doors fit snugly into frames, minimizing drafts and helping to lower heating and cooling costs. While the term "steel door" might bring to mind an industrial look, modern options feature sleek designs, stylish finishes, and even window inserts, making them a practical and attractive upgrade for homeowners looking to boost their property's value.
Material: Fiberglass
Average Cost: $11,353
Average Resale Value: $11,054
Cost Recouped: 97.4%
A grand entrance sets the tone for a home’s overall appeal, and upgrading to a fiberglass entryway is a worthwhile investment. This improvement involves widening the existing doorway and installing a stylish fiberglass door with decorative sidelights, instantly enhancing curb appeal. Not only is this a relatively quick and straightforward project—often completed in a single day—but it also offers an excellent return on investment. With a 97.4% ROI, homeowners can expect to recoup nearly the full cost of the upgrade when selling. Beyond aesthetics, fiberglass doors are durable, low-maintenance, and energy-efficient, making them an attractive feature for potential buyers.
4. Manufactured Stone Veneer
Average Cost: $11,287
Average Resale Value: $17,291
Cost Recouped: 153.2%
Adding manufactured stone veneer to your home is a classic way to enhance its exterior and elevate curb appeal. This upgrade can involve replacing vinyl siding with stone veneer on specific areas, such as the entryway, creating an inviting and sophisticated look. The average cost estimate for this project includes materials for 36 linear feet of sills, 40 linear feet of corners, and one address block, along with two layers of water-resistant barriers and corrosion-resistant lath and fasteners. Homeowners can expect a remarkable ROI of 153.2%, meaning this project not only adds an elegant touch to your home but also boosts your finances by recouping all expenses when it comes time to sell.
5. Minor Kitchen Remodel (Midrange)
Average Cost: $27,492
Average Resale Value: $26,406
Cost Recouped: 96.1%
A modern, functional kitchen is not only essential for enhancing your daily cooking and entertaining experiences but also serves as a significant selling point for potential buyers. According to the report, a minor kitchen remodel using midrange materials typically involves a 200-square-foot kitchen with 30 linear feet of countertops and cabinets. This remodel may include upgrading to new energy-efficient appliances, refacing cabinets with shaker-style panels, installing new countertops or a sink, replacing hardware, adding fresh flooring, and repainting the walls. While primarily cosmetic, this type of remodel allows you to recoup approximately 96.1% of your investment. For those focused on maximizing ROI, a modest kitchen upgrade is the way to go.
6. Siding Replacement
Old or deteriorating siding can detract from even the most structurally sound homes, making them appear worn and uninviting. The report highlights two quality man-made siding materials for replacement: fiber-cement and vinyl.
Material: Fiber-Cement Siding
Average Cost: $20,619
Average Resale Value: $18,230
Cost Recouped: 88.4%
For an average home, replacing 1,250 square feet with new fiber-cement siding costs about $20,619. Homeowners can expect to recoup approximately 88.4% of this investment at resale. This upgrade typically includes various thicknesses of trim (4/4 and 5/4), enhancing the overall appearance of the home.
Material: Vinyl Siding
Average Cost: $17,410
Average Resale Value: $13,957
Cost Recouped: 80.2%
As a more budget-friendly option, vinyl siding costs around $17,410 to replace 1,250 square feet. However, it offers a slightly lower return on investment, with an estimated recoupment of 80.2% upon resale. While vinyl may not yield as high of a return as fiber-cement, it still provides a significant boost to your home's curb appeal at a more accessible price point.
7. Deck Additions
A well-designed outdoor space is high on many prospective homebuyers’ wish lists, making deck additions one of the most popular ways to enhance your home’s exterior. Decks create functional areas for working, entertaining, or simply relaxing outdoors, and they can be constructed from either wood or composite materials.
Material: Wood
Average Cost: $17,615
Average Resale Value: $14,596
Cost Recouped: 82.9%
The average cost for a classic wood deck, sized 16×20 feet, is approximately $17,615. This price includes pressure-treated joists, 4×4-inch posts anchored to concrete piers, three steps, and a surrounding railing. With a return on investment of about 82.9%, wood decks have seen an increase in value over the past year, as homeowners seek to expand their usable living space.
Material: Composite
Average Cost: $24,206
Average Resale Value: $16,498
Cost Recouped: 68.2%
While composite decks typically cost more, averaging around $24,206, they offer a lower return on investment of 68.2%. However, the durability of composite materials is a significant advantage, as they resist rotting, warping, and splintering—common issues with wood. This durability can lead to lower long-term maintenance costs, making composite decks an attractive option for homeowners looking for longevity.
8. Midrange Bathroom Remodel
Average Cost: $25,251
Average Resale Value: $18,613
Cost Recouped: 73.7%
Bathroom remodels remain a popular choice among homeowners looking to enhance their living spaces and increase their home's value. By enlarging the area, updating fixtures, and selecting modern materials, you can significantly improve both the aesthetics and functionality of this essential space. In fact, over 25 percent of Realtors recommend renovating bathrooms before listing a property.
The costs for bathroom renovations can vary widely, typically ranging from $70 to $250 per square foot. On average, you can expect to recoup about 74 percent of your investment when selling your home. Interestingly, like kitchen updates, minor enhancements tend to yield better returns.
9. HVAC Conversion
Average Cost: $18,800
Average Resale Value: $12,422
Cost Recouped: 66.1%
Converting a traditional fossil-fuel-burning furnace to an electric heat pump has seen a significant drop in return on investment (ROI) compared to the previous year. This decline can be attributed to lower natural gas prices and rising electricity costs, as noted by industry experts. Despite the reduced ROI, this renovation still offers a worthwhile return.
While not the most glamorous home improvement, HVAC conversion aligns with the growing trend of adopting eco-friendly and energy-efficient systems. Heat pumps serve dual purposes, providing both heating and cooling, thus replacing energy-intensive air conditioning units. As more homeowners prioritize sustainable living, this conversion reflects a commitment to renewable energy solutions, making it a valuable upgrade for future resale.
Financing Home Renovations
When it comes to funding home improvements, many homeowners opt to pay out of pocket, as highlighted by the 2024 U.S. Houzz and Home Study. In fact, 83% of homeowners surveyed used cash from savings to cover their renovation expenses. While credit cards are another option, they come with high interest rates, so it’s wise to avoid carrying debt month after month.
Sources of Financing:
Cash from Savings: A significant majority of renovators prefer this method, as it avoids interest and debt.
Credit Cards: Approximately 37% of homeowners utilized credit cards for renovations, but this can lead to costly interest if not paid off quickly.
Home Equity Loans: About 14% of renovators financed their projects through home equity loans. This involves borrowing against the equity in your home, making it a smart investment in your property.
If you’re considering financing, here are some effective options to explore:
Home Equity Line of Credit (HELOC): This revolving line of credit functions like a large credit card, allowing you to borrow against your home’s equity. Because HELOCs are secured by your home, they usually offer lower interest rates compared to unsecured loans. They come with fluctuating rates, allowing you to draw from the line for several years before repayment.
Home Equity Loan: Also known as a second mortgage, this option provides a lump sum of cash with a fixed interest rate, repaid over a predetermined term. It’s ideal for those with a clear renovation plan and budget.
Cash-Out Refinance: This option involves replacing your existing mortgage with a new, larger loan and using the extra funds for renovations. While refinancing can incur closing costs and extend your repayment period, securing a low interest rate may make it a cost-effective choice.
Home Renovation Loans: Offered by Fannie Mae and the Federal Housing Administration (FHA), these loans are designed for buyers looking to purchase and significantly rehabilitate a property using a single mortgage.
While utilizing home equity for renovations can be beneficial, it does come with risks. Since your home serves as collateral for the debt, failure to make payments could lead to foreclosure. It’s essential to have a solid understanding of your renovation plans and associated costs before proceeding.
Consulting a Real Estate Agent Before Renovating
Before investing time and money into home improvements, it’s wise to consult with a real estate agent. A knowledgeable agent brings market expertise and a deep understanding of what buyers in your area prioritize, ensuring that your renovation dollars are spent wisely. Here’s how a real estate agent can help you make informed decisions:
1. Understanding Buyer Preferences
Not all home upgrades yield the same return on investment. What’s popular in one neighborhood might not be as desirable in another. A real estate agent can analyze recent sales in your area and determine which renovations have helped homes sell faster and for higher prices. For example, in some markets, a finished basement might be a major selling point, while in others, a refreshed kitchen or updated curb appeal matters more.
2. Maximizing Return on Investment (ROI)
A real estate agent can help you prioritize renovations that will give you the best return. Instead of making costly upgrades that won’t significantly increase your home’s value, they can guide you toward strategic improvements—like repainting walls, updating lighting, or improving curb appeal—that buyers notice and appreciate.
3. Avoiding Over-Improvement
One of the biggest mistakes homeowners make is over-improving their property beyond what the local market can support. If your home’s upgrades far exceed the standard in your neighborhood, you may not recoup the investment when selling. An agent can help you strike the right balance, ensuring your home stands out without overpricing it compared to nearby properties.
4. Navigating Market Trends
The real estate market is constantly changing, and buyer preferences shift over time. A real estate agent stays up to date on what’s in demand and can provide advice on renovations that align with current trends. For example, they might suggest that energy-efficient upgrades or smart home technology could give your home an edge in today's market.
5. Providing Contractor Recommendations
If you need professional help for your renovations, a real estate agent can connect you with trusted contractors, painters, landscapers, and handymen. Having vetted professionals ensures that the work is done efficiently, at a fair price, and up to buyer expectations.
6. Preparing for Appraisal and Inspection
If you plan to refinance or sell soon, an agent can advise on which improvements will have the most impact on your home’s appraised value. They can also identify potential red flags that could arise during a buyer’s home inspection, allowing you to address them in advance and prevent last-minute negotiation hurdles.
7. Helping You Stage and Market the Renovations
Once your renovations are complete, your real estate agent can guide you on staging and presentation to maximize their impact. They can ensure your listing photos highlight the right features and position your home in a way that attracts buyers both online and in person.
Consulting with a real estate agent before making renovations can save you time, money, and stress. Their local market expertise helps you choose the right upgrades, avoid unnecessary expenses, and make your home as attractive as possible to potential buyers. Before picking up a paintbrush or scheduling contractors, reach out to an agent who can help you make informed choices that will truly enhance your home’s value.
The Bottom Line on Enhancing Your Home’s Value
It’s important to remember that the figures mentioned are national averages, and actual costs can vary significantly depending on your region. Factors such as labor and material costs, as well as the level of service provided, can greatly influence these numbers and may change over time. However, the right remodeling project can positively impact your home’s value. When you refinance, for example, an appraiser will consider any renovations when estimating your home's worth. A higher home value means increased equity and a more favorable loan-to-value ratio, which can be advantageous if you plan to take out a home equity loan or HELOC. You may also find yourself able to eliminate private mortgage insurance (PMI) payments sooner than expected. When it comes time to sell your home, buyers are more inclined to pay a premium for a well-maintained property that boasts modern updates and is move-in ready. Enhancing your property not only improves your living experience but also ensures its longevity and appreciation over time, ultimately building wealth for future generations.
Find Your Perfect Home With The McKay Group!
Living in the Fox Valley area and Kane County means more than just beautiful homes—it’s about the lifestyle! With charming downtowns, amazing restaurants, highly rated schools, and a true sense of community, it’s the perfect place to call home. Whether you’re already a local or considering a move to the area, we hope this list has inspired you to get out and explore what makes this region so special. Ready to make a move? The McKay Group is here to help you find your dream home in the heart of the western suburbs.
The McKay Group, led by top-producing agents Debora McKay and Roger Erikson, has been a trusted name in Fox Valley real estate for over 25 years. As recognized leaders in the industry, we proudly rank among the top 1% of agents in the U.S. and have held the title of #1 in Kane County for seven consecutive years. With a commitment to building lasting relationships, leveraging unparalleled experience, and executing powerful marketing strategies, we are dedicated to guiding you every step of the way in finding your perfect home in the Fox Valley Area or surrounding locations.
Contact Debora and Roger today and take the next step toward finding your dream home!
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