Renovations can play a big part in the value of your home. In fact, almost 80 percent of sellers in the U.S. do at least one renovation before their house goes on the market. But, sellers, beware: Renovations do not always add value to a homes appraisal. Heres how to distinguish the smart investments from the costly vanity projects. 

Start Any Project with Expert Advice

U.S. homeowners spend around $400B a year on renovations and repairs, but while house prices continue to rise, returns on renovations are shrinking. Thats largely because the cost of labor and materials is steadily increasing. According to the benchmark report from Remodeling Magazine, the cost to value ratio for renovations in 2020 was 63.7 percent. 

Youll tip the odds in your favor by starting with expert advice from your home inspector and real estate agent, and both will advise you to focus on repair and structural improvements before cosmetic upgrades. As a general rule, based purely on ROI, smaller upgrades are the better investment. A National Association of Realtors survey found that insulation upgrades, new wood flooring and hardwood floor refinishing offered the best ROI, while a new roof was the biggest bonus for exterior projects. 

Take Inspiration from These 2021 Trends

Selling a home in 2021 follows a new set of rules, largely because 22 percent of the workforce will be working from home by 2025 and buyers have different priorities. Expect these trends to remain hot in 2021.

Selling the remote workplace/home:

• Invest in transforming unused space into multi-functional space, e.g., home office by day and yoga studio or home movie theater by night. 
• Create a home for living in. The whole family is going to be living at home more, not darting in and out on the way to someplace else. That means metaphorically taking the plastic covers off the couches and transforming showcase style into cozy, homey areas, e.g., wood-paneled walls or a craft nook with a worktable, shelf and great overhead lighting. 
• Consider the multi-generational household, with parents working from home and young adults temporarily parked out of the market by rising house prices. Consider adding dedicated areas for each generation. 
• Think green. If youre helping buyers save money in the future by adding solar power, better insulation or an HVAC upgrade, your asking price can be higher. 

Inexpensive Ways to Increase Home Value

The simplest, most affordable touches may well reap the biggest rewards, especially where maximizing curb appeal is concerned. In general, exterior flourishes are affordable and pay big dividends on resale value.

Quick fixes:

• Create a great first impression with a front door replacement, such as steel-and-glass, or at least apply a fresh coat of paint to the part of the house that no visitor ever misses. 
• Stand out by installing a new garage door. 
• Consider upgrading or replacing any siding if it looks worn or tired. Cedar and vinyl offer a low-maintenance, long-lasting upgrade. 

More Challenging Upgrades That Add Value to Your Home Appraisal 

If youre working with a bigger budget and have the ambition and resources to handle a more complex project, these more challenging renovations can really add to resale value. From this point on, however, its well worth discussing the returns on your investment with your agent. 

Bigger jobs but with bigger rewards:

• Mid-range kitchen renovation, mainly upgrading the appliances, cabinets, faucets and countertops. The older the kitchen, the stronger the case for investment. 
• Minor bathroom makeover. Expect to invest around $10,000 on new tiling and countertops, and look forward to the best overall ROI on average for home renovations. 
• Replace old windows with fresh, better-insulated ones that demand attention. 
• Attic conversion. More rooms mean more value, but youll need around $40,000 and some specific skills to turn the attic into an office, gym, media room or bedroom, professionally. 

Bring in the Experts for These Renovation Jobs

As a general rule, you will always get a strong return on investment if you address structural issues, but buyers will be looking for a professional job that meets building regulations. Money spent on fixing/upgrading the roof, wall or attic insulation, or plumbing will come back to you at sale time. Likewise, investing upwards of $10,000 on adding a family room will increase your square footage and open up your property to bigger families willing to pay a higher price. But none of these are DIY projects, so youll need to factor in the cost of skilled labor. 

Not All Renovations Guarantee Returns 

Before you consider any upscale refits to the kitchen, bathroom or bedrooms, ask yourself who youre really doing it for. In general, these areas are highly personal spaces that buyers want to connect with according to their own tastes. They typically wont pay extra to indulge your vision, which can be a loss-maker given that the cost could run into six figures. 

Bear in mind that the ROI on high-end renovations rarely goes above 50 percent or more.

Talk to your Briggs Freeman Sothebys International Realty agent about a renovation strategy that fits your budget. Youll find that a real estate professional who knows the local market and trends can offer expert guidance on where your dollar can deliver the biggest difference to your sale price. 

Pictured at top: The beautiful wood floors are the star of this kitchen at 4225 Beverly Drive Highland Park, Texas 75205.