Should you update your home before putting it on the market? Three in four homeowners say they’d rather replace their appliances than accept a low offer on their home, according to a study by Cinch Home Services.
Cinch Home Services surveyed over 1,000 homeowners and renters to figure out how important updates are in the homebuying process. And they discovered that a majority of homeowners think upgrading their appliances will increase their home value by almost $14,000.
Due to this ideology, over half of homeowners plan to upgrade their appliances before putting their homes on the market. Almost 60% will repair or replace their air conditioner, almost 46% will prioritize their dishwasher and about 40% will take a close look at their water heater.
Examine Return On Investment
Unfortunately, upgrading your appliances won’t necessarily allow for a huge return on investment. While upgrades can make your home more desirable, you may not completely recoup the cost of what you spend.
Take major kitchen remodels, for example. According to 2021 research, the average cost to remodel a kitchen was around $75,000. This included upgrades like a built-in microwave, dishwasher, custom lighting, etc. But even with these changes, that only added $43,000 to the resale value and the cost recouped was about 57%.
On the other hand, a simple garage replacement costs on average about $4,000 and adds about $3,000 to the resale value, bringing the cost recouped at $94%.
Here are a few other updates with the highest return on investment:
- Average cost: $10,386
- Average resale value: $9,571
- Cost recouped: 92.1%
Minor Kitchen Remodel
- Average cost: $26,214
- Average resale value: $18,927
- Cost recouped: 72.2%
- Average cost: $19,626
- Average resale value: $13,618
- Cost recouped: 69. 4%
Renovations Can Be Beneficial
Certain home improvements are considered “capital improvements.” For example, if you replace your flooring, upgrade kitchen appliances, etc. that falls under “capital improvements.” While not every upgrade will increase your home’s value, when you sell your house, you can write off your capital improvements.
If you refinance your home after you’ve made upgrades, your home will most likely appraise higher than when you bought it. This means you can potentially increase your home’s equity and lower your loan-to-value ratio.
Renovations might make you feel better about putting your home on the market one day. While we’re currently living in a seller’s market, people looking to sell their homes may not need to put in the effort right now. But having an upgraded home wouldn’t hurt.