Smart renovations that increase your home’s value, and the ones that don’t

With the housing market uncertain, many potential sellers are staying put and choosing to improve what they already have rather than face the challenges of buying and selling. But not every renovation is a wise investment. So how can homeowners make smart renovation choices that maximize long-term returns?

Here’s what industry experts recommend.

Think of renovations as a high-yield savings account

Planning renovations can feel overwhelming, but according to interior designer, HGTV star and former Goldman Sachs executive: Go Alexthe best way to make the right choices is to think of home improvement projects as a high-yield savings account. “The tried and true term that comes to mind is ‘compounding’. The beauty of a high-yield savings account is that your current savings earns a small return each month (depending on the current market environment, usually somewhere between 2.5 and 5 percent). And while it may not sound like much, the benefit is in the compounding nature of these small monthly interest payments that are reinvested back into your account.”

Over time, these small wins add up. “A lower interest payment could mean updating all your light switch covers or repainting your baseboards. A higher interest payment could mean replacing all your flooring or completely renovating a bathroom,” Alix explains. “While you won’t reap the reward monthly like you would in a savings account, the payment will come later in a lump sum in the form of a higher offer when you list your home.”

Focus on high-impact spaces

Although remodeling can be time-consuming and expensive, Alix notes that certain spaces are almost always worth it. “Kitchens and primary bathrooms typically require the most demolition work, are the most disruptive to homeowners’ lives, and incur the highest costs. For these reasons, concentrating your renovation efforts on these two spaces will be money and sweat well spent.”

A custom base cabinet can also be worth the investment. “Many homes don’t have updated or expanded cabinetry because custom cabinetry isn’t cheap. For that reason, it’s a good selling point when it comes time to list your home.”

Renewing the flooring is also a valuable step that can instantly take the entire home to the next level, especially since most homeowners replace the flooring in all rooms at once. “This is the fastest way to refresh your entire home without having to redesign and gut every room,” adds Alix.

Don’t underestimate small, strategic updates

However, seeing returns is not always the result of a complete intestinal renovation. Mike Martirena of the Ivan & Mike team at Compass recommends focusing on smaller, cost-conscious upgrades. “Updating kitchen elements such as new cabinet doors, hardware and backsplashes can also expand the space.”

If cabinets are in good condition, painting them can make a big impact for a fraction of the replacement cost. Repainting a room also goes a long way toward modernizing a space. After all, nothing looks less stylish or turns off buyers faster than chipped paint, cracked walls or dated color choices like an orange kitchen.

Don’t forget the non-cosmetic improvements

Cosmetic upgrades get attention, but behind-the-scenes improvements often yield significant resale value. Lisa Simonsen of Brown Harris Stevens recommends focusing on mechanical and system updates. “Major system improvements such as central air, upgraded electrical or plumbing upgrades add both comfort and resale value.”

However, the usability of specific facilities may be location dependent. For example, Simonsen tells me, “In markets like New York City, adding a washer and dryer can significantly expand your buyer pool, as many older buildings don’t have laundry rooms,” the broker adds.

Energy efficiency is also an increasingly important selling point. “Installing energy-efficient windows, improved insulation, heat pumps or solar panels can reduce energy costs and often qualify for tax credits. These upgrades strongly appeal to environmentally conscious buyers,” says Simonsen.

Renovate in one go if possible

While some homeowners prefer to tackle renovations in phases, Alix says it’s smarter to complete everything at once. “The advantage of renovating an entire space at once is that it’s more efficient because you only have to deal with the mess once, and if you outsource professionals like electricians and installers, their costs will be lower because there will be fewer trips to your home. Plus, there are things you want to capture in real time that are hard to catch when you plot your timeline,” she explains.

This advice is both practical and financial. “For example, if you want to redo your floors first and then add new kitchen cabinets six months later, the shape of the new kitchen may require additional flooring to be installed. Because you waited six months, the new flooring you need to install where the shape of your kitchen has changed may not match the existing floors because they haven’t had the same sun exposure in the last six months.”

For homeowners without the budget to complete everything at once, Alix suggests saving and planning so that the project can ultimately be completed in one comprehensive phase.

Renovations that rarely yield results

But some projects simply don’t justify the cost. “Over-personalization, such as themed rooms, very specific layouts (such as converting a maid’s room into a wine cellar or drastically redesigning a four-bedroom house into a house with fewer rooms or a smaller house, elaborate dressing rooms and ornate offices), and luxury or niche installations (such as aquariums or home theaters) rarely pay off,” says Martirena.

“These types of renovations often appeal to a limited audience and can even deter future buyers who may see them as something to be undone,” the agent warns.

Likewise, over-the-top amenities like elaborate swimming pools, extensive, difficult-to-maintain landscaping, or converting basements into gyms or wine cellars don’t pay off in the long run.

One space to keep simple? The bedroom. “Bedrooms are the easiest room to make cosmetic updates,” reveals developer Joshua Yaghoubzadeh of Bol shares. “I don’t recommend investing in extensive bedroom renovations because buyers know that furniture and decor complete the space.”

Small cosmetic details like repainting and updating lighting fixtures can freshen up a bedroom without breaking the bank.

Ultimately, the smartest renovations aren’t always the most striking; they are the updates that combine functionality and aesthetics. Whether it concerns a renovated kitchen, upgraded systems or simply a new coat of paint: every improvement must be seen in the context of a larger investment strategy. As Alix says, “After all, we should all be looking at our home renovations through the same composite lens.”