The Top 4 Home Renovations That Offer the Highest ROI

Understanding ROI on Home Renovations

Home renovations can vary widely in terms of return on investment (ROI). While some projects, like a siding upgrade, can lead to a solid resale value, others, such as a luxurious new bathroom, might not yield a similar return. Whether you’re helping buyers envision a home in need of a kitchen update or advising sellers on renovations before listing, it’s essential to know which improvements deliver the best returns.

Home Improvements That Pay Off

Although ROI can depend on various factors, the National Association of REALTORSⓇ (NAR) 2019 Remodeling Impact Report highlights four renovations that typically provide the best ROI:

1. New Garage Door While not as glamorous as a kitchen remodel, a new garage door can offer impressive returns. Given that garage doors experience significant wear and tear and can greatly enhance curb appeal, replacing an outdated one is a wise investment. NAR reports a 31% improvement in aesthetics from a buyer's perspective after a garage door replacement.

   The average cost for this renovation is about $2,100, with around $2,000 recouped at resale, yielding a remarkable 95% ROI. Additionally, 66% of homeowners who upgraded their garage doors reported a greater enjoyment of their space.

2. Hardwood Floor Refinishing The impact of flooring cannot be overstated. Well-maintained hardwood floors can elevate a home’s character, while dull or worn floors can deter potential buyers. Refinishing hardwood floors is a cost-effective improvement that significantly enhances both functionality and aesthetics.

   This project typically costs around $2,600, with a full return of the same amount (100% ROI). Approximately 27% of seller’s agents recommend this upgrade before listing, and 5% reported that it helped close a sale.

3. New Wood Flooring If existing floors are beyond repair, installing new hardwood flooring is an excellent choice. Renowned for its durability and timeless beauty, hardwood is often preferred over carpet for its ease of maintenance.

   The average cost for new hardwood flooring is about $4,700, with an expected resale value of $5,000, resulting in a 106% ROI. Although only 16% of agents suggested new wood floors, 5% found it beneficial in closing a sale.

4. New Roofing A well-maintained roof is crucial for protecting a home, reducing energy costs, and enhancing curb appeal. Although roof replacement is one of the more expensive renovations, it offers the highest ROI on our list.

   With an average cost of $7,500 and a resale return of about $8,000, homeowners can expect to recover 107% of their investment. A notable 39% of REALTORSⓇ recommend this project prior to listing, and 33% report it contributed to closing a sale.

Renovations That May Not Be Worth the Investment

Despite common beliefs, kitchen and bathroom renovations may not yield the returns many expect. While these rooms are key selling points, their upgrades often require significant investment with lower ROIs. For instance, a primary suite remodel averages around $150,000, with only $75,000 recouped (50% ROI). Similarly, a kitchen renovation may cost approximately $38,300, returning about $20,000 (52% ROI).

Encourage clients to focus on renovations that offer better returns and lower upfront costs, steering them away from high-expense projects that might not pay off. After all, personal preferences in design can vary widely, so it’s wise to prioritize investments that are more likely to enhance resale value.