Improving your home is one of the best ways to create a space that is unique and special to you and your family in your everyday life. From the colors you choose on the walls to the type of flooring and countertops you have, it’s all a matter of your choice and what works best for you. Before I meet with someone to talk about selling their home, I ask them to rate their home on a scale of 1-10 in terms of upgrades and updates. In simple terms, I tell them that 1 would be plain vanilla, builder basic, and 10 would be model home worthy, loaded with upgrades and selling features. This question helps me to understand how to value their home and know which recent sales I’m comparing it to. Over the years of asking this question, I have come to realize that people define “upgrades” differently, which is why I wanted to address it here today. Let’s talk about what constitutes an upgrade that can tangibly increase the value of your home, versus something I would call more of a “soft-upgrade”, which is something that becomes a nice selling point and a feature, but won’t necessarily increase your home’s value.
Before we dive in, it’s important to quickly note that the open market ultimately determines a home’s true value. Meaning, what a seller is willing to sell it for and what a buyer is willing to pay. This inherently makes value a bit tricky to pinpoint, so for the sake of this article, we’ll discuss upgrades that a buyer would likely be willing to pay more for and that an appraiser would add value for.
To start, let’s talk about what some homeowners mistakenly believe will add monetary value. A new roof or new air conditioning system, while quite costly and certainly worthy selling points, are not considered upgrades, because homes are supposed to have a working AC system and a roof that doesn’t leak. On the other hand, an upgraded kitchen or bathroom increases the home’s value because it makes the home better than it was when it was built. If you replace worn carpet with new modern tile or wood flooring, or add a pool, these upgrades can be seen and appreciated by buyers and appraisers alike. Buyers are willing to pay a premium for these features, thereby adding value. Spending money on quality landscaping and hardscaping is also a worthwhile investment that will likely result in a higher sales price because it increases the visual and functional enjoyment of the home.
Selling features or “soft upgrades” are a bit different. Buyers will likely appreciate a water filtration system, but that doesn’t quite translate into a value gain. Ceiling fans are a standard feature in hot climates, and while a smart thermostat or dimmers for the lights can be great features to discuss, they don’t increase a home’s value. New paint and carpet are a fantastic way to enhance your home’s appeal and to freshen it up for the market, but it’s not what moves the needle for your home’s value. Adding extra electrical outlets might make your life easier, but if a buyer even notices, they likely won’t pay more for the house because of them. Lastly, upgrading your home’s insulation for a cooler summer and lower utility bills makes for excellent talking points with a buyer. It may even make a significant difference to certain buyers, making your home stand out against the competition, but that doesn’t necessarily mean it will result in a higher sale price or a higher appraisal value.
Please don’t get me wrong, all upgrades and features do, indeed, matter. Selling points can be tremendously valuable, even if you don’t see the value adjustment on paper. It’s the whole package, the big things and the little things, that a buyer will consider when deciding which home to purchase and what they’re willing to pay. A home that sells more quickly will almost always sell for a higher price, so your investment was still worthwhile. Ultimately, I believe that the upgrades and features you add to your home should be, first and foremost, for the benefit of you and your family. Someday, when you sell your home, a buyer may or may not appreciate all that you’ve done. As long as you’ve gotten the enjoyment out of what you’ve created, that’s what matters most. If you’re considering upgrading your home and would like to know the best ways to not only improve your home but also to add value, please give me a call. I’d love to meet you and help you make your home even more beautiful :)