The low ROI home improvements sellers should not take on

Key insights:

• While homeowners may invest in improvement projects before selling, there are some projects that won’t pay off at the closing table.
• Because today’s sellers have a bold advantage in the market, they should discern what is really worth updating before listing their home for sale.
• Data indicates some of the most expensive projects — such as a bathroom or owner’s suite addition — may have a low return on investment.

It’s no surprise that today’s housing market is hot for home sellers. If your home is in the right location and well-maintained, you may not plan to update anything on your property before you list it for sale. But if your home is outdated, or you’re simply aiming for an even higher bid, some carefully considered renovations could give you an extra edge in the housing market.

Keep in mind, though, that not all home projects provide an equal payoff for sellers. Before making big changes to your home, be sure to research the typical return on investment (ROI) of the updates you have in mind.

The Remodeling 2024 Cost vs. Value Report (costvsvalue.com) provides an exhaustive list of renovation details that helps guide home sellers on what projects are worth taking on before their for sale sign is posted. The report includes the specific cost and value of home improvement projects across the country and even breaks the data out by region and city.

Here are the projects Twin Cities homeowners should avoid if they want to position themselves for the most cost-effective sale in the near future.

1. Upscale owner’s suite addition

Cost: $370,214
Resale value: $66,688
Cost recouped: 18.0%

Everyone enjoys a spacious bed and bath. An upscale owner’s suite addition will result in a 32x20-foot space including the home’s primary bedroom, walk-in closet, lounge space and bathroom — but at a significant expense. At a cost of more than $370,000 with a resale value of less than $67,000, homeowners shouldn’t invest in a project this extravagant unless they plan to enjoy the updates for many years before selling the home.

Instead, it may be wise for sellers to complete a mini bedroom makeover. Plenty of inexpensive tricks can help spruce up an existing bedroom, and they’re bound to appeal to interested homebuyers.

2. Upscale bathroom addition

Cost: $113,1652
Resale value: $29,405
Cost recouped: 26.0%

If your home is low on bathroom space, you may be considering a bathroom addition. For the project profiled in the Remodeling 2024 Cost Vs. Value Report (costvsvalue.com), you’d install a shower, free-standing soaker tub, compartmentalized commode area and even electric in-floor heating, all with high-end finishings.

As with the full suite addition, this update is quite expensive and recoups just over 25% of the initial cost at resale.

The analysis is clear: Even if your buyers will be discouraged by the total number of bathrooms in your residence, it is probably not worth it to put in a new bathroom right before selling. Instead, work to present your existing bathrooms in their best light. Strategically stage your bathroom by replacing hardware and light fixtures and setting out luxe towels.

3. Midrange bathroom addition

Cost: $64,868
Resale value: $17,227
Cost recouped: 26.6%

At a little less than $65,000 in renovation costs, homeowners will only see a $17,000 resale value. With less expensive fixtures, tiling and cabinetry, you’d expect more than a 0.6% increase in recouped costs from the upscale option, but there’s just a projected 26.6% of costs recouped with this project.

Just like the upscale bathroom addition, the midrange option probably won’t bring in more motivated buyers for the price increase. Instead, make the most of the bathrooms you do have by adding storage and making less costly updates to fixtures and hardware.

Want to learn about the ROI of home projects worth investing in?

We’ve detailed the three projects with the lowest return on investment, but we’ve also recapped the top five home improvement projects with the highest ROI locally for you to consider. And if you’re planning other remodeling projects, take a look at the complete 2024 Cost vs. Value Report (costvsvalue.com) for the Minneapolis area.

Consult a real estate expert before you sell

While these renovations come with a bigger price tag, it might make sense for you to take on higher-cost, lower-ROI projects if you plan to stay put for a few years. You can measure your return on investment by your personal enjoyment of the space, after all!

However, if your updates are solely intended to improve your odds when selling, either with the hopes of an even speedier sale or one with a higher bid, be sure to consult your agent before you start renovations. Get in touch with Edina Realty or your agent, who can advise you on the most impactful changes that work for your goals and your property.

©2024 Zonda Media, a Delaware corporation. Complete data from the 2024 Cost vs. Value Report can be downloaded free at www.costvsvalue.com.