If you're considering renovating your home, you’re in good company. Americans typically spend over $400 billion a year on home renovation projects and repairs. But not all home improvement projects translate into an increase in home value. In fact, making the wrong moves during renovations could cost you when it comes time to sell your home.
7 mistakes to avoid while renovating
Whether you’re working with a professional contractor or you’re planning to DIY your renovations, watch out for these common mistakes homeowners make when remodeling.
1. Being blind to finances
One of the unofficial rules of renovating is to expect it to cost more and take longer than initially planned. So, before you begin knocking down walls, know what you’re going to spend and how you’re going to pay for it.
Set a budget. Create a priority list of projects you plan to attack and assign a dollar amount to each. Make sure there is a cushion in the budget to handle unexpected costs or additional, necessary projects.
Consider the best financing options for renovations. Whether you’re thinking about using the equity in your home or plan to take out a renovation loan, crunch the numbers to determine which financing option makes sense for you. Choose what will provide the most flexibility should you go over budget.
Be realistic about your expected ROI. Many homeowners incorrectly assume $15,000 of renovations will increase their home value by $15,000. Except for a few projects, you're not likely to recoup what you spend on renovations dollar-for-dollar.
2. Picking the wrong projects
Unless you’re gutting the entire home, you’re going to need to choose what projects to focus on, especially depending on how you're financing the renovations. Cash-out refinancing, for example, often comes with interest rates lower than personal loans or credit cards, so it may be better for your longer-term projects, whereas a credit card (especially one with a good rewards program) may be your best bet for quick purchases.
Regardless of how you pay, if you’ll be living in the home before selling, then you’ll want to prioritize your needs when renovating. But if your primary objective is to increase the value of the home, consider these projects most likely to add value, according to the National Association of REALTORS® (NAR).
Exterior Projects Most Likely to Increase a Home’s Value | |||
Project |
Estimated Cost |
Estimated Increase to Value |
ROI |
New roofing |
$7,500 |
$8,000 |
107% |
New vinyl windows |
$22,500 |
$16,000 |
71% |
New Fiber-Cement siding |
$19,700 |
$15,000 |
76% |
New wood windows |
$35,000 |
$20,000 |
57% |
New vinyl siding |
$15,800 |
$10,000 |
63% |
Interior Projects Most Likely to Increase a Home’s Value | |||
Project |
Estimated Cost |
Estimated Increase to Value |
ROI |
Complete kitchen remodel |
$68,000 |
$40,000 |
59% |
Partial kitchen remodel |
$38,300 |
$20,000 |
52% |
HVAC replacement |
$8,200 |
$7,000 |
85% |
New master bedroom suite |
$150,000 |
$75,000 |
50% |
Bathroom renovation |
$35,000 |
$20,000 |
57% |
Source: NAR
3. Ignoring the front yard
Curb appeal. Many homeowners make their buying decisions based on curb appeal but forget about it when it’s time to sell. Even if the majority of the renovations are inside, don’t forget the importance of addressing the front yard and other exterior projects. Some buyers will not be able to see past an unkempt lawn or a front door with peeling paint.
Keep things simple, though, as overly complicated landscaping can scream high maintenance and may deter some buyers.
4. Adding too many unique features
A common mistake many sellers make is assuming that their taste and needs are the same as everyone else’s. If you converted a spare bedroom into a dance studio with a wall of mirrors, that may have worked for you but could be a turnoff for buyers who will see that as wasted space they’ll need to renovate.
If you’re prepping to sell, avoid customizing the home in a way that tailors specific tastes. Instead, opt for features that provide universal appeal, like new appliances.
5. “Over-renovating” for the neighborhood
When choosing your renovation projects, it’s important to consider the character of your current neighborhood. If you make too many updates, it’s possible to price yourself out of the market. Consider the community and how it has (or has not) changed in recent years when determining what upgrades to consider. You should also consult with a real estate professional to see what’s expected in your market.
6. Renovating based on trends
Trends come and go, so play it safe by choosing upgrades that will stand the test of time and will be appealing to a variety of tastes. If you overhaul your home based on a farmhouse aesthetic, that may not appeal to a buyer with contemporary taste. The same goes for incorporating technology. What is current now may be obsolete by the time you go to sell.
Focus on trends that never go out of style, like making the home more energy-efficient.
7. Prioritizing cosmetics over the basics
Kitchens and bathrooms definitely provide the “wow factor” for prospective buyers, and many homeowners put a lot of attention there when renovating. However, don’t forget the less fun but functional areas of the home, such as the plumbing or electrical systems, which also increases a home’s value.
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