“A new roof adds value? That’s about as real as the tooth fairy, right?”
I’m on the phone with a new client in Pine Grove. She and her husband have made the decision to downsize to a smaller home. But with all the new builds and modern subdivision homes available, she’s nervous. Their family home was built in the 1980’s. Will it be overlooked on the market?
So, we’re on the phone, reviewing their budget and deciding the best way to use it to get this house sold to a new owner fast.
Instead of a new bathroom or a kitchen remodel, I suggested installing a new roof.
If you’re getting ready to list your house on the market, I’m sure you’ve run across dozens of articles on “The Best Way to Increase Your Home’s Value” and “Realtor Secrets for Selling Your Home.” Most of them will recommend updating the kitchens and bathrooms.
Which is funny because…those are the two things new homeowners are most likely to re-do once they purchase your home!
In this article, I want to show you how investing money inside your home isn’t always the best answer when it comes to boosting its listing price.
Let’s take an in depth look at what really matters when it comes to calculating your home’s ROI (Return On Investment) and how to spend wisely when it comes to improving your home to sell.
Not planning on selling? This article is still for you! I’ll also share some information on how roof age and material can affect your home’s value, which can be very helpful if you plan on leveraging its equity in 2023.
Ready? Let’s dive in!
“What is Return on Investment (ROI)?”
Imagine this: You’ve decided to renovate your small bathroom. The project will cost an average of $6,500. But after the contractor sweeps up…is your $6.5k just gone?
Cue: Return on Investment (ROI).
“Return on investment” is a fancy way of saying- how much money are you going to get out of what you put in. If you buy a classic car for $1,000, spend $5,000 restoring it, and then sell it for $15,000? You just got a $9,000 return on your $6,000 investment. That’s a 150% return on your investment (or- sometimes you’ll see it written as 1.5X)
Some things don’t increase in value just because you put money into them. Your classic car was a special case. You were able to get more money out of it when you sold it than what you put in.
But with most cars? They start to lose value the moment you drive them off the lot. So if you spend that same $5,000 on changing the upholstery or customizing the paint? You won’t be able to get your $5,000 back out of the car when you sell it.
Let’s leave the car talk on the road and head back home.
You’ve spent $6,500 on a new bathroom. If you put this home on the market, your bathroom renovation is anticipated to receive a 70% ROI. That means, because of your renovation, your bathroom is worth 70% of your renovation cost more. You spent $6,500 in order to increase your home’s value by $4,550.
“That’s crazy!” you might be thinking- and a lot of homeowners do. “Should my bathroom be worth at least the $6,500 I put in…if not more??”
Unfortunately, no. To make things even more complicated? That ROI doesn’t last forever. If you spent $6,500 renovating your bathroom in 1999? Your outdated bathroom may actually decrease the value of your home!
And this math doesn’t just matter for homeowners looking to sell. This ROI is how smart homeowners determine what projects to do now- and what to save for later.
We’ve discussed planning a renovation in phases before, and calculating ROI is an extension of that conversation. If both your roofing and siding need to be replaced and you don’t have the cash to fix both? ROI can help you think about the best project to start with.
Home renovation ROI is very important for new homeowners, and we’re seeing quite a lot of them! Last year, Pennsylvania home prices rose 14.6%. This number continues to grow. If you’re one renovation short of calling a realtor, calculating ROI is a genius math secret you can use to make the most of your budget.
Now that you’re familiar with the meaning, let’s circle back to the importance of a new roof when increasing home value.
Can A New Roof Sell Your Home Faster…and For More Money?
Ever heard the saying, “If it’s not broken, don’t fix it’? Although an average asphalt roof needs to be replaced every 30 years, most homeowners won’t bother with such a massive project unless there’s substantial damage.
If your roof’s still under warranty? This isn’t the article for you. But if your roof’s older than you are? It’s time to consider a replacement.
According to this 2019 Cost vs. Value Report, a new roof has an average ROI of 68%. Not quite as high as that new bathroom, right? Yes… and no. The National Association of the Remodeling Company found new roofs receive higher appraisal values, by about 109%.
Your new roof increases your curb appeal, which in turn, increases your home value. (Something as simple as updated landscaping can have a 5-11% increase in value.)
And that’s not all. A new roof also saves money through:
- Lower insurance rates (Average 20% drop)
- Save on your electric bill (10% decrease)
- Added protection from water damage (Costs homeowners an average of $2,852 each year)
But how do you know the best roof replacement for your home?
When choosing a new roof, there’s hundreds of material and color options available. You can read a thorough cost and breakdown of pros and cons of the various options, here.
But let’s take a look at the factors which affect a new roof’s ROI. The two biggest deciders? Material and color.
What Roofing Material Has The BEST ROI?
If you’ve read any of our earlier articles, you know we’re big fans of metal roofs. They’re incredibly durable with a lifespan of up to 70 years.
But when it comes to ROI? Asphalt roof comes out on top with a 68% ROI vs Metal at 60.9% ROI.
The biggest reason for this gap? We all know and love shingles! Asphalt shingle is popular, which means homeowners are more comfortable with it overall. Plus, if all the houses around yours have asphalt shingles, fitting in increases curb appeal.
People like what they know!
While material is the largest value factor, it’s not the only one. The color of your roof also plays a huge role.
Can A Roof’s Color Increase Home Value?
Your roof makes up 40% of your home’s exterior. When a potential buyer is pulling in for that first showing, the color of your roof can have a big subconscious impact on their first impression.
Potential homeowners look for roofs that
- Match a home’s facade,
- Match, or at least complement, neighboring houses
- and have great energy efficiency.
General perception is that “lighter” equals more efficient. While we’ve debunked that here, your home shoppers likely aren’t reading our blog.
With production shortages and limited supply, choosing a roof color has been difficult for Pennsylvania homeowners in 2022. GAF just announced it will be reducing its product line to focus on keeping core colors in stock, which makes choosing a color even more of a challenge.
This is why we offer all of our clients free “mockups” using our visualization software. With this system, you can see your roof in a new color before we ever order the materials.
We also offer resources on choosing the right roof color for your home. You can read up more, here.
Selling Your Biggest Investment
You’ve decided it’s time to sell your home. It can be hard to realize you may not get everything out of it you’ve put into it. Trends and tastes change, and that all affects your listing price. Fortunately, everyone recognizes the importance of a quality exterior- and we can help you make great decisions on how to get your home buyer-ready.
Decided you’d like to talk about a new roof before listing your home? Modernize offers a free ROI calculator for your new roof investment. This handy tool is a huge asset for homeowners interested in selling.
Even more so, our team is here for you every step of the way.
Interiors, exteriors, we do it all. To book time on our schedule this winter, give us a call at 570-345-0436. We’d love to hear from you!