The Rachel Cruze Show - The Secret to Boosting Your Home's Value

Episode Date: April 24, 2023

Today’s episode is all about the biggest financial asset most of us have: our home. We’ll start by covering how to figure out how much your home is worth. After that, I’ll share proven ways to boost your home’s value, as well as which upgrades aren’t worth the money.   What you get in this episode: ·      How to Actually Determine the Value of Your Home ·      Proven Ways to Boost Your Home’s Value ·      9 Home Upgrades That Aren't Worth Your Money Helpful Resources: Christian Healthcare Ministries Carly Jean with code “Rachel” EveryDollar                                                 Sponsors pay the producer of this show, The Lampo Group, LLC, advertising fees for mentioning their services or products during programming. Advertising fees are not based upon or otherwise tied to any product sale or business transacted between any consumer or sponsor. The following sponsors have paid for the programming you are viewing: Christian Healthcare Ministries and Carly Jean Los Angeles.   Learn more about your ad choices. https://www.megaphone.fm/adchoices Ramsey Solutions Privacy Policy Learn more about your ad choices. Visit megaphone.fm/adchoices

The market value is not based on formulas. It's based on how much someone is willing to pay for your home. And these four steps will help you find the right price to get you the most money and the least amount of time as possible. So you can move on, literally. Hey guys, welcome to this episode of the Rachel Crewe Show podcast. I'm so glad that you're here. So in this episode, we're talking about all things homes. Are you trying to sell your home anytime soon or flipping a home?

Well, if so, you will not want to miss this episode. I'll go over eight upgrades that are worth your money and will actually boost the value of your home when you go to sell. And then we'll go over upgrades that are not worth your money. But first, let's talk about how to determine your home's value. Take a listen. Today, we're going to talk about how to figure out what your home is really worth. Your home is a huge factor in your total net worth,

not to mention selling your home is a really big deal. I've heard that about half of Americans cross. when they sell their home. And it might be tears of joy, tears or sadness, or probably tears of stress. And I totally get it because, listen, this is one of the most valuable things that you own your home. But you really can get a good idea of the value of your home. No tears necessary. So first, let's go over two definitions of home value. There's fair market value and appraised value. So fair market value is the price that both the buyer and the seller agree. is fair. So asking an experienced real estate agent to do a comparative market analysis is the best

way to determine a fair market value for your home. So basically, that's when the agent looks at your particular area and what similar houses are selling for. But appraised value is how much your mortgage lender determines your home is worth. And appraised value is based on things like your home's age, location, square footage, number of bedrooms and bathrooms. upgrades, and recent sales in the area. Now, this number is more for mortgage lenders and taxes. It doesn't have to match the sale price. Okay, so now that you know the two different types of values,

we're going to go through four steps so that you know how much your home is worth. Step number one, learn the facts about your house and the local market. So believe it or not, your homes at market value is not based on what you paid for your house or how great that you think it is. So in a nutshell, market value is what buyers are willing to pay for your home. Sometimes it's way more than what you bought it for. Sometimes it's less,

which is not great. But it really has to do with your local real estate market. And I know that you love your home and it can be really hard for you to see your home through buyer's eyes. But the sad truth is they're going to see that beautiful pink pinstripe accent wall in your daughter's room is just one more room that they're going to have to repaint. And that's so sad. You work so hard on your home and someone goes in like, I hate the light pictures. Why do they pick? this color and you're like because it's beautiful. I don't know. I love it. So here are also some facts about your house that a buyer will be looking at. Location, location, location. Is your house in a nice part of town? How close is it to highways and shopping and even safety? Does your neighborhood have

sidewalks? What's the crime rates? Curb appeal. Is it beautiful or is it ugly? Square footage? How big is it? What's the layout? Are the appliances updated? How are the schools? How are the schools? rated. I mean, there are so many factors, you guys, that go in to buying a house. Okay, so here are some facts about your market that buyers are going to consider, and sadly, some of these are just out of your control. Mortgage interest rates. So a mortgage is a huge financial commitment. So a high interest rate will keep buyers from pulling the trigger. That's what we've seen with rates this past year. We've all experienced that. Time of year. So for example, people are not going to probably move in the middle of December or even after the school year has started. So expect to get more or less

offers depending on the time of year. Also supply and demand. Guys, this is a big one. If there are a ton of houses on the market, that means you've got competition. On the other hand, if there are more buyers than for sales signs, which has happened a lot in the recent years, raise that price. And finally, look at how similar homes in the area have sold. So remember that comparative market analysis, that we talked about. Well, knowing how much people are willing to pay for a home like yours in your neighborhood can give you a good idea of how much you can sell your home for. Now, I know that it's a lot, but quick online search can give you a ballpark number. All right, step two is to use a free online home value estimator.

So if you search your address online, you're going to see like Zillow or Redfin come up and you're going to find different facts about your house that are public, like the year. it was built, the number of rooms and bathrooms, square footage, and how much you and each previous owner paid for the home. Yep. Thank you, Internet. Gives you all that information. So along with all that, you're also going to see the estimated market value. Now, don't get excited about this number. Online estimates are helpful, but they're not always accurate. The real value you'll get from these sites comes from the information that you're finding out about your housing markets. All right, step three is to compare your homes of value to other homes in the neighborhood.

So you guys, this is the only time I'm ever going to tell you to compare your house with someone else's. So on sites like Zilla, you can see is my home value trending upward or downward. How does my home value compare to other homes in my neighborhood? In my zip code, what's alike? What's the market like? Is it hot or a cold time to sell? That's useful information that you can discuss with your agent when it comes time to set the price of your home. Step four is to work with a real estate agent's. Agents have access to better

databases and use real-world experiences to compare your home's nitty-gritty details to recent sales and current listings. No computer can do that. A good real estate agent will take the time to come and actually look at your house. They'll consider the landscaping, the condition of the house, and any upgrades that you added. And then they're going to determine the market value of your home. So getting a great real estate agent, you guys, it is so. worth it. And for a fast and easy way to find a Ramsey trusted agent, try our endorsed local providers program. We only recommend top agents with years of experience so you can sell your home on your timeline for the right price. So I'll drop a link to our website where you can find a Ramsey

trusted agent in the show notes. And remember, the market value is not based on formulas. It's based on how much someone is willing to pay for your home. And these four steps will help you find the right price to get you the most money and the least amount of time as possible. So you can move on, literally. Today we're going to talk about ways to boost your home's value. So maybe you're thinking about remodeling your kitchen or you're planning to put your house on the market sometime soon. But whatever you're doing, stay tuned for some of the best home improvements that will maximize your return on investment. Now, a little disclaimer before we get started, do not use debt for home improvements. Okay, just don't do it, you guys. A 90% ROI is still a 10% loss.

And an ROI is not the same as cash in your pocket. So you still don't want to be paying for countertops that you bought in a home on debt that you don't even live in anymore. So treat this like any other purchase and pay cash. Home improvements are not a wealth-building tool when you go into debt to pay for them. Okay, now that we've got that out of the way, let's go through some different types of upgrades, starting with improvements to make if you plan on staying in your home. So in general, projects that add square footage may be a good investment

in how much you're enjoying your home, but they may not increase its value. So, for example, say you have three kids and two adults living in the house and one bathroom. Adding a second bathroom makes a ton of sense, but it's not going to add much value to your house. You'll only get about 50% back on your investment when you sell. If you need more space, remodeling unused areas like your attic or basement into living spaces will give better ROI. If you know you're going to be saying put, make improvements that make sense for you and enjoy them. Just know you might not see a good return on those investments, but that's okay because it's for you. Okay, best value home improvements if you're selling.

So when you're ready to sell, home improvements that make an impact for less money is the way to go. All right, let's start with the outside of your home. For a few years running, replacing your garage door has the best ROI. Go figure. I know it seems so random, but according to a cost versus value report from remodeling.com, this project will almost pay for itself, returning over 93%. of its $4,000 average cost. Now, a few other upgrades you can do outdoors

is replacing vinyl siding with a stone veneer. So you could spend $11,000 on this and you will get a 91% ROI. Replacing vinyl siding, you'll spend $19,000, and you'll get a 67% ROI. Adding a wood deck, you'll spend $19,000 and get a 65% ROI. Now, inside your house, you can do a minor kitchen remodel that will earn you back 71% of $28,000.

So that includes new appliances, refacing cabinets, adding new hardware, and updating sinks and countertops and floors. So whether you're staying or selling every room in your house can boost the value of your home with just a few improvements.

So here are a few more ideas. And your floor year or entryway, upgrade the stair banisters, replace or refinished flooring. All right, up next is the living. room. So replace a refinished flooring. You can add a fireplace or deep clean your fireplace rock work. Bedrooms, upgrade closets. This is big. You can install shelving for more space and also replace or refinished. Okay, in your bathrooms, you can replace flooring, add storage cabinets, change showerheads

and other hardware, upgrade the vanity and recalk or reglaze the bathtub. All right. In your garage, to replace your garage door, install shelving, and add storage areas. If you have a basement, you can finish the space with insulation, drywall, windows, closets, flooring, HVAC connection, all of that. That will give you a lot of space. Now, keep in mind that all of these projects have different ROIs depending on where you live. So ask a local real estate agent what improvements they recommend in terms of the value of your house before taking the plunge and spending so much money.

All right, next up is invisible home improvements, aka things you'd rather not spend money on because you just don't see it. So these are maintenance projects like replacing your HVAC unit or your hot water heater. And with these projects, you're maintaining your home's value. You're not adding to it, and yet you usually got to do it. So some of these include insulating your hot water pipes,

patching up leaky windows and doors, using long-lasting LED light bulbs, staining and sealing wood decks, and the best home improvement for reducing maintenance costs is window replacements. Now, you may not get very excited about new windows. I personally do, because I love windows. I just think they're beautiful.

I actually notice them. So for some people, like, I want to update my kitchen. I'm like, oh, windows are great. But listen, they save you a ton in costs to heat and cool your home. So it is worth it. plus new windows can boost your home's value. On average, homeowners expect to recoup nearly $68% of the $25,000 cost of a window replacement project.

Next on the list are the no-demo renovations. So you can add value to your home without knocking down walls or ripping up flooring, which is great. So just adding new paint will give you the biggest bang for your buck. Paint will also conveniently cover up little mishaps, like when you're a five-year-old, It's a hold of a Sharpie and it sounds silly, but the smell that new paint costs is when you walk in. It smells new. It does. You can also upgrade light fixtures.

This will really update your look and potentially save you and your buyer money and energy costs. You can also try some smart home upgrades like your thermostat that you can control from your phone. These don't have to cost a lot. They really don't have to be fancy. And you can get a smart thermostat, for example, that costs around $200. So we have that. We got our doorbell. We have some lights on our phone that turn on with Alexa and all of it.

So these little things are great. Kind of update your home in a sense. Now, lots of people are working from home these days and need a home office. So if you're an empty nester, set up that extra bedroom with a desk and a computer. So when buyers walk through the home, they get that idea and can kind of picture a home office. And last but not least is landscaping. And you guys, curb appeal is a legit way to. add value to your home. So clean up your yard, add some live plants, reseed your lawn.

Again, if you want to go crazy, you can add some paverstones. Just make it beautiful because when someone pulls up, the value of your home is just right there. It's the first impression. So making these improvements to your home can definitely boost its value, but everything that I've shared today is based on national averages. So the best way to gauge, which you can expect in terms of resale value on home improvements, especially if you're planning on selling soon, is to talk to a real estate agent who is an expert in your market. They will know local trends, and they can show you how other homes with the features you want,

how they're selling. So for a fast and easy way to find a Ramsey trusted agent, try our endorsed local providers, our ELP program. ELPs are professional real estate agents who have a track record of success and excellent customer service. So I will drop a link to our website where you can find a Ramsey trusted agent

in the show notes. Today we're going to talk about home upgrades and improvements that are not worth the money. Now, none of these are bad, but these upgrades are not going to increase the value of your home. So how long you're staying in your house is something you always want to consider when it comes to upgrades. But before I get into upgrades that are not worth it, here's just a general rule. Don't price yourself out of your neighborhood. And I was counterintuitive, but having the nicest house on the block is not great for resale. You can actually improve your home too much by putting money into improvements that will not increase your home's market value.

So how is this possible? Well, because the values of the other homes in your neighborhood, which may have the same square footage, but not all have the expensive updates that yours does plays a big part in determining the market value in your neighborhood. So in other words, the homes that are similar to yours, without the upgrades are going to bring the market value of your house down. That's why high-end upgrades don't usually bring a return on investment or an ROI when you go to sell.

So think upscale kitchens, bathrooms, or a master suite renovation. So again, I'm talking about major renovations where you rip it all out and start over. These will usually leave you holding the bag for about half the costs. So here are eight upgrades that you're going to want to think twice about. Number one, in general, taking rooms away may not be the wisest decision. I mean, have you ever been tempted just to knock the wall in your bedroom out and go on to the next room? So you can have a massive master room with like a seating area where you can drink coffee in the morning. Yes, me too.

I understand that. But sadly, it is not a great idea for resale. Most people need more bedrooms, not bigger bedrooms. Number two, murals and wallpaper. Guys, wallpaper is a very personal choice. I love some of it, so I'm not mad at wallpaper, but not everyone loves it. And not everyone loves your choice of wallpaper,

so that actually could ding you with the thought of them having to remove it. And the same is true with murals. So one of our team members had a mural, the previous owner, painted in her basement. The meadow in the babbling brook, might have just been the trick to let this guy relax, but it took her two coats of primer to cover it up. So, no, thank you.

Number three, not so great DIY projects. All right, listen, I'm all about a good DIY project for you to save some money. But when you're getting ready to sell, I would call a professional. Buyers are going to notice craftsmanship, and they're going to have a good eye for things that are not done correctly. Number four, converting your garage to a gym. Listen, I think convenient. physical fitness is great for those who use it.

But still, most buyers are more interested in a place to park their cars, not to lift weights. Number five, wall-to-wall carpeting. In general, realtors do not recommend replacing your carpet in order to sell your home. But if you're getting ready to sell, have it cleaned. But if you're staying put, you could consider hardwoods. These will last decades longer and boost your home's value. Number six, an upscale deck. I know it's really tempting to think that a new upscale deck maintenance free with beautiful materials

is going to be great and boost your home's value, but no. Decks just come with the house no matter what they're made of, and same with swimming pools. So make these upgrades because you enjoy them, but don't expect to recoup any costs for resale. Number seven, solar panels. Listen, I'm all for efficient energy, but the data shows that solar panels will not boost the value of your home. In fact, they can be a deterrent to a buyer who does not like the look of them. Number eight, fireplace mantles. Adding bookshelves on either side of your fireplace or adding a mantle will look really nice,

but it will not increase the value of your home. If you're selling, focus more on fixing cracks and making sure that your fireplace is in working order. Those things will come back to bite you in a home inspection. So deep clean your fireplace brick, that can really spruce it up. All right, again, none of these upgrades or improvements are bad, you guys. If you want to do them and you have the cash, do it. But what we're talking about here are the ones that will not increase the value of your home when you go to sell it. Upgrades that are not worth the money, you guys, you know, sometimes they're great.

And again, if it works for your family and you have the money, do it. But just know when it comes to selling your home may not be worth it. Well, thank you guys so much for listening to this episode of The Podcast. And if you have not hit that follow button to subscribe to the podcast, make sure to do that. and please leave a review. It is so, so helpful to get feedback from you guys. We love hearing from you, so please leave that review. Well, thanks again, and as always,

make sure to take control of your money and create a life you love.