How to increase your home value: 9 tips

What factors affect a home’s value?

A home’s value can be affected by a number of factors, including:

• Location
• Home characteristics (square footage, condition, age, layout, etc.)
• School district
• Comparable homes
• Market conditions

Many of the factors that influence home value can’t necessarily be controlled, like the age or location of the house. However, there are plenty of improvements you can make to the existing home that can boost its sale price.

Focusing on these projects will help you maximize your value when the time comes to sell your home. Just make sure you consult with professionals so your changes don’t end up hurting your home appraisal.

Reasons to improve your home’s value

There are several reasons why homeowners might want to take steps to increase their home’s value:

• Sell your home for a higher price: Some improvements can increase your home’s resale value, though returns vary widely by project and market conditions. While certain improvements create a higher return on investment than others, most home improvements can increase the chances of selling at a higher price.
• Increase your home equity faster: Equity is the difference between the amount you owe on your mortgage and the value of your home. The greater the difference between your existing mortgage balance and your home value, the more equity you can use for home improvements, debt consolidation, or other financial needs.
• Cancel private mortgage insurance (PMI): Conventional loans typically require PMI when a borrower puts down less than 20%. In many cases, borrowers can request PMI cancellation once their mortgage balance reaches 80% of the home’s original value. Some lenders may also allow early cancellation if a new appraisal shows that your home’s value has increased enough to provide at least 20% equity.
• Help guard against major market dips: The housing market is always prone to volatility. If home values in your area start to fall, a few upgrades can offset the decline in value.
• Improve your quality of life: Financial considerations aside, home upgrades can make your home a more comfortable and beautiful place to live. The same qualities that make a home more attractive to potential buyers tend to appeal to the current owner as well. Taking steps to increase your home’s value can turn your home into a sanctuary you never want to leave.

9 ways to boost your home’s value

Here are nine home improvements that can net you the best return on investment.

1. Declutter

Home buyers want to be able to picture themselves living in a house, and getting unnecessary items out of the way allows them to do that. A clean, clutter-free home is more appealing to a buyer and can convince them to place a more competitive offer. Some steps to declutter and clean your home include:

• Getting the home professionally cleaned
• Removing any unused furniture
• Removing photo frames and other items from walls
• Storing items hidden from view

2. Remodel the kitchen and bathroom

The kitchen and bathroom are two of the most functional spaces in any house, so updating them is a great way to improve your home’s value. Consider upgrading appliances or bathtubs or creating more luxurious shower spaces.

However, don’t feel pressured to make everything a major expense. Even minor touch-up work can pay off. A minor kitchen remodel can make back up to 113% of its cost, according to The Journal of Light Construction. Plus, everyone can become handy thanks to YouTube videos and classes at local hardware stores.

3. Boost your curb appeal

Curb appeal essentially means ‘what people see when they look at your house from the street.’ Your home’s interior might be spotless, but if your curb appeal is lacking, you’re just taking money out of your own pocket. Simply replacing your garage door can add thousands of dollars to your home's value.

The outside of your home is the first thing potential buyers see, so here are some ways to add value by enhancing your curb appeal:

• Upgrade the landscaping by planting trees and building pathways
• Replace or repaint the mailbox
• Upgrade the front door
• Install outdoor lighting along walkways
• Power wash the driveway and sidewalks

4. Consider a new paint job

• Discuss how painting the home’s interior or exterior can help it look less dated, address potential lead paint issues, and provide the opportunity to use neutral colors that may appeal more to potential buyers.
• Discuss what affects how much paint jobs typically cost (such as a bedroom, a bathroom, or the full exterior) and provide the typical ROI if possible.

A fresh coat of paint can go a long way in improving a house’s appearance. Opt for neutral paint colors to appeal to all potential home buyers. Bright colors might have appealed to you at the time, but if you’re trying to sell and potential buyers don’t share your taste, you’ll have a harder time getting your house off the market. From a practical perspective, you may need a new coat of paint if you have cracked or peeling areas in a home, especially if it was built before 1978, as lead paint was still common at the time.  Peeling or deteriorating paint in homes built before 1978 may raise concerns for buyers or lenders and could require remediation.

5. Add square footage

Increasing the size (or square footage) of a home offers additional value by expanding its usable space. Additional bedrooms and bathrooms offer the most significant financial benefit, but you could also consider increasing the kitchen and family room spaces.

With higher construction prices and other costs, adding more square footage isn’t cheap, but it will add value to your home. They include:

• Primary suite addition (midrange) = 32% ROI
• Primary suite addition (upscale) = 18% ROI
• Bathroom addition (midrange) = 53% ROI
• Bathroom addition (upscale) = 36% ROI”

6. Make your home more efficient

In addition to increasing the value of your home, some home upgrades can lower your energy bills and make your home more energy-efficient. These projects include:

• Switching to LED lights
• Replacing windows
• Upgrading the insulation
• Repairing and sealing ducts
• Using smart home technology (like programmable thermostats and smart power strips)
• Replacing or upgrading major appliances (like the HVAC system)
• Installing solar panels

To find any existing inefficiencies or savings opportunities, homeowners can request an energy audit. These inspections can help pinpoint air leaks, energy waste, or other issues that could be costing you money. They might also recommend updates that qualify your home for tax credits.

7. Add a deck or patio

A deck or patio provides the perfect place to hang out, play games, and entertain guests. If you’re feeling adventurous, you can step up to the big leagues and add an outdoor kitchen space as well.

Decks tend to bring a high ROI compared to other home improvement projects. Wood deck additions have an ROI of 95%, according to JLC Cost vs. Value Report, while composite decks bring an ROI of 89%. Be sure to shop around for affordable construction, and see if you can trim costs by using less expensive materials.

8. Build a garage or shed

While they won’t add to the home’s livable square footage, garages and sheds are considered a huge bonus feature by most home buyers. Whether the space is used to keep your vehicles out of the elements or as a workshop for your latest DIY project, an updated garage or shed can push up the value of your home.

To save on these projects, consider getting at least three contractor quotes to ensure competitive pricing, and look at prefabricated kits, which can cost 20% – 30% less than custom builds. Materials like vinyl siding combine durability and affordability, typically cost much less than brick, and can save you more if you do the painting or basic shelving yourself.

9. Finish your basement

Finishing a basement can provide a great place to hang out, and ROI for this work can be pretty high. You'll typically recoup 70% – 75% of costs, according to the Massachusetts Association of Buyer Agents, while adding valuable space that can be used for entertainment, home offices, or guest rooms.

Keep in mind that this particular project requires some intensive construction work. For starters, it’s key to begin with proper waterproofing to prevent potential flood damage. Then, with some good lighting and insulation, you can transform that dark storage area into something inviting. You can save money if you do some of the painting and simple tasks yourself, but be sure to hire pros for electrical and plumbing to ensure everything’s safe and up to code.

How to finance improvements that increase value

Home improvements can be costly, but the funding doesn’t have to come straight out of your pocket. Here are some ways to finance your next upgrade:

• Credit card
• Personal loan
• Home equity loan
• Home equity line of credit
• Cash-out refinance

Additional home improvement grants are available for those who demonstrate financial need and meet certain requirements.

The bottom line: Choose the right strategies for increasing your home’s value

Smart home improvements can elevate your daily living experience in the house while also boosting your property's value when it’s time to sell. Focusing on curb appeal, savvy updates, and additional square footage can catch buyers’ attention while attracting stronger offers.

For those settling in for the long haul, choose upgrades that will make you smile each day, knowing that thoughtful improvements typically translate to a high ROI down the road. With some planning and creativity, your house can become both the backdrop for your favorite memories and a wise investment that grows over time.

Want to use your home’s equity to fund your next remodel or renovation? Discover your options and apply for a loan that fits your needs.

This article is for informational purposes only and is not intended to provide financial, investment, or tax advice. You should consult a qualified financial or tax professional before making decisions regarding your retirement funds or mortgage.

Refinancing may increase finance charges over the life of the loan.

Rocket Mortgage is a trademark of Rocket Mortgage, LLC or its affiliates.