Home Renovations That Will Boost Your Listing Price the Most
SOURCE: Realtor.com
When it comes time to sell your home, some renovation projects can provide a bigger price bump than others.
Using a statistical analysis of listings on Realtor.com®, our economic research team identified the price premium associated with certain renovation-related keywords while controlling for other key factors.
Perhaps surprisingly, the phrase “new landscape” was associated with the biggest bump in listing price of any renovation-related keywords. Listings referencing a new landscape were 8.1% higher than those of similar homes, equaling a $34,794 bump for the median-priced home.
A home’s curb appeal is critical when it comes time to sell, explains real estate expert Terry Haas, a team leader at 32 South Properties in Charleston, SC, and former regular on HGTV’s hit series “Designed to Sell.”
“If the front of your home isn’t inviting, buyers may not even take the time to explore inside,” says Haas. “Curb appeal is everything, and a clean, well-kept exterior can be the deciding factor in whether a buyer even considers the rest of your home.”
The second highest bump came with the words “renovated kitchen,” which boosted listings 7%, or $29,891 for the median-priced home. Notably, the similar term “remodeled kitchen” had a smaller impact, boosting the listing just 4%. The divergence may reflect differences in how real estate agents use the respective terms in listing descriptions, although traditionally “remodeling” implies larger fundamental changes than “renovating.”
Our analysis also found that the terms “remodeled bathroom” and “new bath” both boosted listing prices by about 3%. Updated kitchens and bathrooms are where buyers’ eyes go first once they enter a home, according to Haas.
Depending on the market, a complete kitchen renovation may or may not be cost-effective, but updates to key elements can provide strong returns to sellers, says Haas.
“Repainting or refinishing cabinets, swapping out old fixtures, and upgrading countertops can make a big impact without breaking the bank,” says Haas. “Even smaller updates like new cabinet hardware or modern lighting can give these spaces a fresh, updated feel.”
In general, the Realtor.com analysis found that the most visible updates—exterior improvements and updates to kitchens and bathrooms—provided bigger boosts than renovations that were more functional in nature.
“Buyers are willing to pay a premium for things they can see and experience during a tour,” Haas explains. “While important, hidden updates like plumbing, foundation work, or a new HVAC system aren’t what usually ‘wow’ buyers. If you’re trying to maximize visual impact, invest in the areas that catch their eye.”
For example, the phrase “new roof” was associated with a listing bump of just 1.1%, or $4,585 for the median-priced home. That’s less than half the $9,500 national average cost to replace a home’s roof, according to HomeAdvisor.
The full cost of most home renovations is rarely recouped when it comes time to sell. And some renovations can potentially lower a home’s value, such as layout changes that reduce the number of bedrooms. But ideally for sellers, a decent share of the cost of recent renovations will be reflected in their home’s sale price.
“What’s most notable to me is just how high the premium is on new landscape, but it makes intuitive sense,” says Realtor.com senior economist Ralph McLaughlin, who conducted the analysis. “After all, the land surrounding a home is also usable space that buyers value and it is often the first characteristic of home that they see when making a home buying decision.
“What’s more, the cost of landscaping projects can add up. Landscaping is not just grass, shrubs, and flowers but also paving, decking, irrigation, etc., that can drive landscaping costs upwards. So certainly a part of the large premium association with new landscaping is due to the high costs of the project itself.”
To determine the listing premiums associated with several home renovations, we tested whether there is an effect of specific listing description terms on listing prices, using a hedonic pricing model. First, we looked at all of the single-family homes listed for sale on Realtor.com in the U.S. on Aug. 30, 2024, and identified which ones were described with the words “New Roof,” “New HVAC,” “New Windows,” “New Floors,” “Renovated Kitchen,” “New Bath,” “Remodeled Kitchen,” “Remodeled Bathroom,” “New Landscape,” “New Driveway,” “New Deck,” “New Appliances,” and “Updated Lighting.”
We then estimated a hedonic model to determine the effect of these terms on the home’s listing price while controlling for the number of bedrooms, number of bathrooms, square feet, lot size, age, and ZIP code of each property. This allowed us to estimate how much of a discount properties with such terms were listed for, on average, than similar properties within the same metro without such a term. We used a 5% level for statistical significance for interpreting the listing term coefficient.
Impact of Renovation Key Words on Listing Price
How much will your renovation boost your listing? Using prices on Realtor.com, we determined the listing price premiums associated with a number of renovation-related keywords in listing descriptions.
SOURCE: Realtor.com