Your home isn't just a place to rest your head—it's also one of the biggest assets you'll own in your lifetime. Its value can change over time due to a variety of factors, but your home's condition, appearance, and amenities have a huge impact on what it's worth. Renovations are an effective way to boost your home's value, and although they can have a high price tag upfront, the long-term payoff is often well worth the investment.
In fact, some updates essentially pay for themselves, resulting in a higher home-value increase than the initial project cost. To find out which home renovations offer the most bang for your buck, we turned to the experts at Realm, a free online tool that uses property-specific data to recommend updates with the biggest value boost. If you're looking to sell your home or simply hoping to tap into its full potential, consider these five home-improvement projects with the highest return on investment.
1. HVAC System
The heating, ventilation, and air conditioning (HVAC) system is critical to the comfort and health of your home, making it a highly important component to maintain. If yours is old or in poor shape, a replacement can be a smart investment in your home's value. According to Realm's data, the national average cost of an HVAC replacement is just under $5,000, but it can result in a property-value increase of $10,684, or a 214% return on investment. That means you can recoup more than double the project's initial cost when you sell your home.
2. Outdoor Firepit
A built-in firepit offers a cozy spot to relax or entertain guests in your backyard, and it's become increasingly sought-after in light of the coronavirus pandemic. With people spending more time at home and many gatherings taking place outdoors, this exterior feature is more valuable than ever. Adding a firepit to your outdoor space can increase your home's value by $5,700, and with an average cost of about $3,000, your return on investment is 189%.
3. Roof Replacement
If your roof is aging or in need of repair, not only are you susceptible to water damage and other issues, but you could be missing out on thousands in potential value when you go to sell your home. Although a roof replacement will set you back approximately $8,730, you can tack on an average of $13,156 to your home's value. This allows you to recoup 151% of the project cost, making it a sound investment before your home hits the market.
By adding a deck, you can boost your home's useable living space without the expense of an entire addition. This outdoor project can create an inviting spot to host gatherings or kick back outside—and increase your home's value by $8,555, Realm's data show. The average cost for a new deck is just over $6,000, so you can recover 142% of your investment.
5. Exterior Painting
Curb appeal is a crucial component that helps attract potential buyers, and a fresh coat of color on the facade can even give your home's value a boost. Exterior painting costs an average of $8,476 and results in a home-value increase of $10,959—a 129% return on investment. Be sure to choose exterior colors that complement your home's style and the neighboring houses for the biggest payoff.