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Save Money, Live Smarter and Boost Your Home’s Value With These Tech Upgrades 

Home technology upgrades can be an expensive investment, but they could improve your property value and save you money over time.

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One advantage of being a homeowner is that you can shape your property however you want. A home improvement investment can enhance your day-to-day living situation, make your home more sustainable and increase its value. It can also save you money in the long run.

Upgrading your property with new technology can be a big boost to its worth and potentially increase your home equity. A home with tech upgrades can be more attractive in the buying market and easier to sell when the time comes

“By implementing cost-effective upgrades with proven and long-term savings, homeowners make their homes more attractive to potential buyers who recognize the savings they will achieve,” said Lucas Haldeman, CEO of SmartRent

Though housing market experts say it can be hard to measure exactly how certain tech-savvy renovations might increase your equity, they are generally a good investment. 

Will tech upgrades increase my home’s value? 

If you plan to upgrade your home to sell it, determine how much the improvements cost. While many are easy and affordable, some tech upgrades are an investment, so it’s worth knowing how much of that cost you’ll be able to recoup. 

There are different layers of value when it comes to homeownership, according to Haldeman. The first is home equity, measured as the difference between what you owe on your home and its appraised value. There’s also energy efficiency and sustainability. Utility expenses, long-term savings and high return on investment are important factors to consider, as well.

Unlike basic upgrades, such as a kitchen renovation or flooring, it’s harder to gauge whether certain smart home upgrades are beneficial to a home’s value. Technological renovations are often specific to one’s preferences, the neighborhood and what’s trending at the time. 

Home value

A home’s appraised value is determined by a professional assessment at a specific point in time. A home’s market value is based on what a buyer is willing to pay, which is influenced by macroeconomic conditions and market forces. 

When appraisers look at homes souped up with smart home upgrades, they’ll make what are known as appraisal adjustments, reflecting the amount buyers are typically paying for those specific features. 

“Smart homes command higher prices and may be easier to sell as a result,” said Tai Savet, founder of Agents of LA

When it comes to tech, things change and evolve rapidly. The upgrade you make today might be outdated five years from now, so make choices geared to what makes your life better, said Alexander Lerner, director of residential realty at Figure8 Realty in Los Angeles.

Let’s take a look at some popular tech upgrades for your home: 

Smart thermostat/Climate control 

For many, smart thermostats are the first logical tech upgrade that delivers the greatest overall value and ROI, said Haldeman. Through occupancy sensors, some smart thermostats gauge whether you’re home or away and will adjust the temperature for you. Others toggle between “home” and “away” modes based on your phone’s location. 

For roughly $200 to $500 to purchase and install, you’ll get a significant improvement in home energy regulation and control. “Homeowners can reduce their overall energy consumption, which translates into money saved throughout the life cycle of owning the home,” Haldeman said. 

Water monitor leak detector 

Another popular smart home upgrade is moisture sensors in thermostats and water monitor leak detectors. These sensors can help with early detection of faulty pipes or flooding, letting you quickly address issues and prevent costly property damage -- and avoid having to file an insurance claim for water damage. 

“Having these technologies can also help reduce insurance premiums, and helps to protect homes against significant climate changes and extreme weather patterns,” Haldeman said. 

Integrated smart lighting systems

A modern version of The Clapper, smart lighting systems allow you to control and regulate the lights in your home via a smartphone or other smart device. This can save you money by cutting back on your electricity usage. Lighting makes up an average of 3% of a home’s energy use, and investing a few hundred dollars in a smart switch starter kit and some bulbs can equal savings in your electric bills.

Security system

Security systems, used in tandem with smart home hubs, and security feature add-ons, such as smart locks and doorbells, are financially sound upgrades, according to Haldeman. “Not only do they provide an improved sense of security, they can be easily installed by a homeowner and for a relatively low cost depending on how advanced a system they are installing,” he said. 

High-performance windows

High-performance windows are windows with two or more panes of insulated glass that can help boost energy efficiency by improving insulation. Plus, they can offer better acoustics through greater sound control and allow more light to enter your home. Installing these types of windows costs anywhere from $800 to $1500 per window

Heat pump system 

A heat pump system can be an energy-efficient way to control the interior temperature of your home. You won’t need to use the furnace and air conditioner for your heating and cooling needs. 

A heat pump system taps into electricity to transfer heat from cool spaces to warm ones. In the summer, it moves the heat from indoor spaces to outdoor ones to cool your home. In the cooler months, a heat pump will use the heat from outside to increase the temperature inside your home. 

Solar panels 

Installing solar panels in your home can help you save on utility bills in the long run. But there’s a large upfront cost, and if you need to finance them, that’s an added responsibility. 

Solar panels cost an average of $3.30 per watt or $16,500 for a 5-kilowatt system. You’ll want to do your homework and see if the price tag for getting solar is worth it in terms of energy savings and sustainability impact. 

Home battery

In recent years, home batteries aren’t just for backup power. Time-of-use algorithms and virtual power plants help you save on your utility bills. However, like solar panel systems, solar batteries can be expensive, anywhere from $12,000 to $22,000, according to the US Department of Energy.

Where you live matters

The value of some upgrades might be higher depending on where you live. Energy-efficient upgrades might be more desirable and common in areas where the electricity bills are high. When factoring in the costs, it’s a good idea to see what statewide and local tax incentives and rebates are available, as well. 

Will tech upgrades cost me a lot of money? 

The cost of home tech upgrades depends on a handful of moving parts: the type of upgrade, how long you plan to live in the house and how much money you’ll save in the long run.

For instance, pricier upgrades, such as installing solar panels or batteries, can cost tens of thousands of dollars and usually require financing. Some smaller tech upgrades, such as a smart security or lighting system, are far less expensive improvements you might be able to cover out of pocket. 

When it comes to balancing your initial investment versus the value you’re getting, tech upgrades may help with energy costs, giving you savings in your monthly budget. 

However, because some of these upgrades depend on your lifestyle preferences, you can’t always really bank on getting great returns from dollars and cents perspective, said Will Lau, realtor, founder of Will & Way Homes and author of From Vision to Realty. 

Read more: How a Home Equity Loan Can Help You Pay for Energy-Efficient Upgrades

What is the best way to finance home improvements? 

When you have a substantial ownership stake in your property, you can take out a second mortgage to finance home repairs or upgrades. If used responsibly, a second mortgage, usually a home equity loan or a home equity line of credit, can give you access to borrowing at lower interest rates than personal loans or credit cards. 

If you decide to make a significant investment and you need to tap into financing to cover the upfront cost of your projects, there are several options: 

Home improvement loans

A home improvement loan is a personal loan, either secured or unsecured, and used for home improvement projects. A secured loan means it’s backed up by your home as collateral. With an unsecured personal loan, the annual percentage rate tends to be higher than with loans taken against your home equity

Home equity loan (HE loans) 

A home equity loan is a type of loan where you borrow against the equity in your home. You’ll receive a lump sum upfront and are responsible for paying it off through monthly installments. 

You’ll need a minimum of 15% or 20% equity to be eligible for a home equity loan. Because these loans are backed by a valuable asset – your property -- the lending criteria tend to be less strict, and the interest rates are typically lower than with a home improvement loan or credit card. 

Home equity line of credit (HELOC)

A home equity line of credit (HELOC) also taps into the equity of your home, but instead of a lump sum, it’s a revolving line of credit, like a credit card. You’re given a credit limit for a set amount of time, and can borrow against your line of credit as needed. And just like a credit card, you pay off the balance over time. 

Cash-out refinance

A cash-out refinance is another common way to pay for home improvements and upgrades. You replace your existing mortgage with a new, larger mortgage. After closing costs are accounted for, you pocket the difference. Lenders typically let you cash out on up to 80% of your home’s equity. However, this is a larger, longer loan with new terms and APRs, so you’ll want to make sure you can stomach the new debt. 

While a cash-out refinance does also give you a bundle of cash for your home tech upgrades, it might only make sense if you can get a lower interest rate. Otherwise, a home equity loan could be the stronger choice, as long as you have a repayment plan in place. Otherwise, it’s not worth risking your home if there’s a chance you could default on your loan.

Know the risks

No matter which financing route you choose, it’s important to look at your budget and factor in monthly payments to make sure you can afford the debt. If you decide to go with a secured form of financing, like a home equity loan or HELOC, remember that your home is used as collateral. That means you risk foreclosure if you fall behind on payments.

To get the best rates on a home equity loan or HELOC, be sure to shop around and start with a bank or credit union you have larger deposits with, said Lindsey Harn, an agent at Christie’s International Real Estate in San Luis Obispo, California. “If you have a good relationship with a bank, they may often offer you a discount on the mortgage, such as a lower interest rate,” she said.

Read more: These Homeowners Tapped Home Equity to Get Ahead With Their Finances. You Could, Too

The bottom line 

Tech and smart home upgrades have a lot of advantages for homeowners, but be cautious about investing in them purely based on the potential to increase your home’s value. 

Such renovations are beneficial if you’re seeking a more sustainable lifestyle, want to save money on energy bills or plan to sell your home soon.

“Ultimately, buyers have come to expect smart home technology in some form or fashion,” said Haldeman. 

Jackie Lam is a contributor for CNET Money. A personal finance writer for over 8 years, she covers money management, insurance, investing, banking and personal stories. An AFC® accredited financial coach, she is passionate about helping freelance creatives design money systems on irregular income, gain greater awareness of their money narratives and overcome mental and emotional blocks. She is the 2022 recipient of Money Management International's Financial Literacy and Education in Communities (FLEC) Award and a two-time Plutus Awards nominee for Best Freelancer in Personal Finance Media. She lives in Los Angeles where she spends her free time swimming, drumming and daydreaming about stickers.
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