Not every renovation adds value. Here are three things I tell every seller about where to put their money before listing.

It’s starting to get warm, and I’m already getting the calls. What’s the biggest bang for my buck? What should I do to my home before I put it on the market?

After 20 years of buying, selling, investing in real estate, and doing the work myself, I can tell you there are three things every homeowner needs to think about before spending money on a renovation.

Skip the expensive projects that don’t give you the value back. Kitchens and bathrooms are the biggest resell items, everyone knows that. But when you look at the actual numbers in the cost vs. value report, people were only getting almost 36% back from those expensive kitchen renovations.

So I don’t want you going in and saying, “I’m going to rip out this kitchen and put in this grandiose kitchen,” just because you’re about to list. That’s not the move.

“In 90% or more of our properties, we’re doing paint, carpet, or hardwood floors because it’s the highest perceived value you can get.”

There are three things to consider before you gut a kitchen:

  • One, it needs to fit the neighborhood and the location of the area.
  • Two, it has to be the type and value that’s going to make sense for what the home is worth.
  • Three, it’s probably not necessary.

You could end up doing the floors, the countertops, and the safety and maintenance items, and just cleaning it up. Now, if the property is truly dilapidated and the kitchen needs everything, that’s a different story. That’s a repair, and it needs to be renovated to bring it to market value. But if you’re looking at a functional kitchen and thinking about an expensive overhaul just for resale, think twice.

Focus on perceived value. This is where your money actually works. Perceived value is the cosmetic stuff, the things you can touch up or improve that make the home feel updated without breaking the bank. In 90% or more of our properties, we’re doing paint, carpet, or hardwood floors. Why? Because it’s the highest perceived value you can get. When people walk in, and it looks clean, smells clean, and feels updated, they feel like this is what they’ve been looking for. When you go over the top, the rate of return drops.

A garage door and stone veneer replacement returned over 200% value. I’ve talked about curb appeal before, and whether we’re buying our own home or buying one of our investment properties, we focus on curb appeal, kitchen, baths, and amenities. If you can change and adjust those exterior items, it makes the home more attractive, and the perceived value goes way up. People are going to make an impression within the first 10 seconds of walking through that door. If it’s clean, light, bright, and you’ve done some higher perceived value updates, they’re typically making a decision to buy right there. If it doesn’t hit, they turn on their heels and walk right back out.

Hire the right contractor. Get good referrals. If you don’t have good referrals, there are great search engines and apps that can help you locate one. Then get three bids. Why three? Because everybody’s going to give you a different perspective. One’s typically going to come in really low, and it just won’t make sense. Another will be way too high because you’re paying for their lifestyle, not their craftsmanship. But you’ll find people whose work is amazing, who have a lot of tenure, and who give you very good advice.

Look for people who can give you guidance and a plan. Make sure they’re licensed and insured. There’s also the Utah construction registry, where you can register the job so that you’re protected in the process. If they’re asking for all the money up front, that’s a red flag. But if they need money for materials, that’s reasonable, just make sure you’ve planned for how you’re going to pay for it.

And my last tip on hiring a contractor: mentally add 10% to 20% to the quoted price. Changes happen, and adjustments come up. Make sure to budget for them.

If you’re considering putting your property on the market as things start moving this season, and you want to know what you should be doing, reach out and let me give you a custom plan. I just talked to a gentleman today with that exact situation, and it came down to three things: what’s the plan, what are my options, and what would I get out of it? What is the highest and best use, what is the maximum value, and where would the home be perceived in the market? That’s what I do for you. Call or text me at (801) 285-0521, email me at Justin@JustinUdy.com, or visit www.justinudy.com for more. I’m looking forward to helping you out.