Skip to Main Content

Should you renovate your home before putting it on the market?

Young Woman Shaking Hands To Male Plumber With Clipboard In Kitchen
ljubaphoto/Getty Images

At Bankrate we strive to help you make smarter financial decisions. While we adhere to strict , this post may contain references to products from our partners. Here’s an explanation for

In this competitive seller’s market, you may think there’s no need to renovate your house before putting it on the market. And in one way, that’s true: with housing inventory at an all-time low, your home will probably sell, no matter its condition.

But, if you’re looking to get top dollar in the transaction, it’s still worth making some improvements before listing it, according to Christian Fuentes, an agent and broker with RE/MAX Top Producers in Southern California. “The house will show better,” he said “It will make a better first impression.”

That said, major renovations generally do not pay back even close to what you paid when you sell a house, at least in normal real estate markets. However, today’s red-hot real estate market is not normal, with bidding wars common and a lack of inventory nationwide, plus spiraling prices.

Katie Severance, author of two real estate books including “The Brilliant Homebuyer: 101 Tips for Buying a Home in the New Economy,” and an agent in New Jersey, says the renovation question has some nuances.

“The short answer is it depends on what you’re renovating. If the house is in great condition in every way except the kitchen or a bathroom, it’s probably worth doing,” she said.

So here’s everything you need to know about renovating in this economy.

What kind of renovations should you consider?

Fuentes said it really depends more on your appetite, patience and budget than anything else.

“Typically what I’ve seen is that whatever you’ve spent on a home is that you’ll get that returned a hundred percent. If you spend $20,000 renovating a home, you’ll get that back,” he said. “Is it a good investment? Yes, it is.”

Severance cautioned, though, that sometimes a homeowner can overdo it. “You don’t want to do a high-end expensive kitchen because you might be in danger of not recouping your money,” she said.

For many homeowners preparing to sell, however, a major renovation sounds like a major headache more than anything else. If you don’t want to get bogged down in a big project right before you move out, Fuentes said just doing a few basics can go a long way to boosting your house’s desirability.

“The highest return is on paint,” Severance said. She also recommended paying extra attention to outdoor spaces, because the coronavirus pandemic has led buyers to focus on the exterior more than ever. Making sure landscaping is fresh and the front walk is in a state of good repair can make a big difference.

Even little DIY upgrades like a fresh coat of paint, installing new carpet or flooring, repainting or replacing kitchen cabinets or even just updating finishes like the faucet or towel racks in your bathroom can help make the property more attractive to buyers, too.

“Typically you’re trying to brighten up the houses,” Fuentes said. These things, he added, are “not very costly but could bring a newer, modern look to homes.”

If your home is a true fixer-upper, you may want to consider more extensive renovations or resign yourself to the fact that even in the current competitive housing climate, some buyers will be turned off.

“Would a house sell even if it needs work in this market? Yes. The question is, do you want to make more money?” Fuentes said. “Doing the work could draw more buyers and get you a better profit.”

Things to remember when renovating before a sale

If you do decide to renovate before you sell, keep in mind you’re not renovating for yourself, so you don’t necessarily want to finish things exactly to your own taste.

“I would say try to stay neutral as much as possible,” Fuentes said. “If you do design, you’re looking for people who are going to love it and they’ll give you extra money. You have to find people who like what you have.”

So, you may want to shy away from a bold-colored accent wall or funky-patterned countertops. Otherwise you risk turning off some buyers who would want to come in and replace those finishes.

The more neutral your renovations before a sale, the easier it will be for buyers to put their own touches on their new home.

It’s also important to keep things clean before listing your home. A thorough cleaning can make a big difference in buyers’ first impressions, Fuentes said.

Best and worst renovations to recoup your costs

According to Remodeling, a trade publication for home contractors, aesthetic exterior improvements were the most cost effective based on 2020 data. Things like a new facade or garage door saw home sellers recouping up to 95 percent of their costs. Meanwhile, bigger projects like a major kitchen renovation or adding a master suite had lower returns — in the 50 percent range.

“People turn the third floor of the house into the master bedroom suite,” Severance said. “A lot of buyers with children don’t want to be on a separate floor from their kids. For resale, they should think very hard about that.”

She said it’s better to focus on other investments like finishing a basement, which can be done relatively inexpensively, upgrading an outdated electrical system or removing an underground oil tank, even if it’s no longer in use.

“If they’re afraid, they won’t make an offer. You want to take an unknown entity and make it known,” Severance said. “Remove the tank, provide an estimate for knob and tube replacement if you can’t do it. Give them information.”

Another key thing for sellers is to make sure to fix any existing leaks and repair old water damage.

“If there is any water stain in a wall or in a ceiling, then re-plaster or re-sheetrock the wall or ceiling, and that’s very important,” she said. “People are very, very afraid of water or any signs of water.”

Tips for financing a renovation

If you’re thinking about selling your home and want to spruce it up before you do, you may need to borrow some money to get the work done.

Check out Bankrate’s guide for more detailed home renovation financing tips, but here are some of the basic ways to do it:

  • Cash out refinance, home equity loan or home equity line of credit (HELOC). If you’ve been in your home for a while, you probably have significant equity built up, which you can tap to fund repairs or renovations. The balance of this new debt will be paid off when you close on the sale of your house.
  • Personal loans or credit cards. These tend to have higher interest rates than home equity products, but this route will allow you to pay the costs off over a longer period of time, and keep the full profits of your home sale instead.
  • Specialized loans or government programs. Depending on where you live and what kind of work you’re doing, you may qualify for financing targeted specifically at home renovations.

Bottom line

For many people, their house is their largest investment. When it comes time to sell, you want to get the highest price possible, and that often means you’ll want to consider making some last-minute improvements before putting your home on the market.

Even in the current competitive real estate environment, it can still be a good idea to spruce up your place to make it more attractive to buyers. Your wallet will thank you later.

Learn more:

Written by
Zach Wichter
Mortgage reporter
Zach Wichter is a mortgage reporter at Bankrate. He previously worked on the Business desk at The New York Times where he won a Loeb Award for breaking news, and covered aviation for The Points Guy.