Will this renovation really add value to your home?

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Thinking about refinancing or selling your home? That’s when it helps to know its value, and a home appraisal website is a good place to start. If you are serious about selling, consider hiring a listing agent for a Comparative Marketing Analysis Report (CMA) for more accurate pricing. When the CMA reveals a price range that doesn’t satisfy you, a home renovation is one way to add value.

However, before you hire any contractors or begin any home improvement projects, you should determine which renovation projects will provide the highest return on investment. Surprisingly, many home improvement jobs don’t offer as much value as you might think. Very few home projects break even in terms of home value, while overdoing a remodel can drive a home off the market. Read on to learn more about the true value of renovating your home.

Reasons for renovation

Consider the goal of your home renovation carefully before you begin so you can choose the best renovations for the right situations. Are you doing upgrades to sell the house? Would you like to increase the value of your home for refinancing? Or do you just want to make your home more comfortable?

Even if a home upgrade is for the sake of quality of life, there may come a time when you want to sell your home. Because of this, it’s wise to make upgrades that aren’t likely to hurt a future sale.

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Using home improvement calculators

If you’re considering a remodel, especially to sell your home, it’s a good idea to start with an online renovation calculator. These calculators provide insight into how much a project could cost, and some even estimate the likely return on investment (ROI) of a renovation. There are also smartphone apps that predict renovation values.

Leading interior renovations

Renovations that increase the value of living

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When you’re ready to start renovating, focus on the projects that will bring the most value. A kitchen renovation is a high ROI project as it doesn’t require a complete demolition while still providing value. Buying new kitchen appliances, upgrading hardware, re-finishing cabinets, installing new floors, and painting walls can achieve an ROI of up to 72 percent.

In addition to kitchen renovations, bathroom remodels can offer between 70 and 78 percent ROI. These two areas add a lot of value indoors alone. However, if you want to take it a step further and finish an attic or basement, these projects could add an additional 65 and 76 percent value to a home’s interior, respectively.

Top exterior renovations

When it comes to outdoor upgrades, you might be surprised to learn that updates with the greatest ROI are simple. According to a recent study by HomeLight, minor improvements to your curb appeal through basic garden maintenance, tidying up the landscape, adding bark mulch, painting your home’s exterior, and installing a new garage door can yield a 238 percent ROI.

Renovations with negative impact

Renovations that increase the value of living

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Although renovations always seem to improve the home price, there are times when upgrades can actually decrease the value of your home. For example, too much wallpaper can negatively affect the value of the home. Additionally, bold colors have the potential to deter buyers when trying to sell your home.

Decreasing the number of bedrooms in your home by combining them can affect the value, especially if homes in your area generally have a certain number of rooms. Extremely complex modernizations in the bathroom or kitchen can also put you at a disadvantage. Finally, poor landscape features can negatively impact home value.

RELATED: 13 mistakes you shouldn’t make if you ever want to sell your home

DIY renovations can affect value

Some people do their home renovations to save on costs. While this is often a good strategy, it may not be the case if proper procedure is not followed. For example, unauthorized structural modifications to a house can be dangerous and cost you significantly when selling. Many other home projects require permits, including roofing, window replacement, decking, fence installation, kitchen or bathroom remodeling, and electrical work.

If you wish to proceed with the DIY approach, first ensure that you have approval from your local government and that your final project will be approved for safety and legal reasons. Failure to obtain the proper permit(s) could not only block the sale of your home, but could also result in fines or a lien on your home.

A final word

Will this renovation really add value to your home?

Photo: istockphoto.com

You may have heard of anecdotes where owners’ failure to renovate home sales hurt home sales. However, too much renovation can also negatively affect a sale. Potential buyers may love the nice changes you have, but lenders may not see it that way.

An overly embellished home can, in some cases, be almost as bad as one in disrepair. This is because a large proportion of real estate sales depend on comparative values. Therefore, if your renovated home is worth much more than other homes in the neighborhood, potential buyers may not be able to get a loan to purchase it. On the plus side, a cash buyer not at the mercy of a lender may be able to buy your home.

When it comes to renovations, it’s best to weigh all the options – positive or negative – before beginning the remodel.

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