Do Home Renovations Affect Property Value?
You want to sell your home, but you want to do so for a reasonable price. Surely you’ve looked up on the internet and heard anecdotes from friends about how their renovations moved their home’s price higher because these projects add value to the property.
Well, let’s dig deeper into the value of home renovations and see whether they pay off and are beneficial for you.
Remodelling Projects by the Numbers
According to IBISWorld, which tracks companies engaged in the remodelling sector, as of 2018, this industry has grown to US$99 billion or 6.4 percent in five years in the US. Their market-trends report revealed kitchen and bathroom remodelling as top projects, alongside room and outside additions, systems and equipment, and disaster repairs.
Separate research analyzed the individual cost of twenty-two remodeling projects and the value they retained at resale. For example, the most expensive project undertaken is the addition of a master suite for US$271,470 and the resale value of which is US$136,820, recouping 50.4 percent of the cost. The least costly home project is replacing the entry door with steel at US$1,826, with an ROI of 74.9 percent or resale value of US$1,368.
Perennial favourites like bathroom additions and bathroom remodel got 60.6 percent and 67.2 percent returns, respectively. Do note that the figures stated here are 2019 national averages; visit your region for the specifics.
The comparable value, comparable listings, or comps in real estate lingo can help you determine your home value. This benchmark takes into account the going prices of similar homes sold in the neighbourhood. With the help of comps, you can set your price and probably decide on whether to move forward with some home renovations such as adding a master suite.
The room addition can work both ways, where a three-bedroom house will not sell faster than other two-bedroom houses in the area because the space is too big. Meanwhile, some families might be looking at bigger homes such as your home.
Health and Security
Alongside making cosmetic changes, ensure your home is safe and healthy. You, or preferably a professional, has to check the property for indoor pollutants and issues and have these possibly health-threatening concerns corrected. If you have a pool, you have to revisit its safety features.
For security, it bears emphasis to replace any broken windows and take extra measures aside from locking your doors. As an example, when you use Peterson lockpicks, you’ll discover how even the most sophisticated door locks can easily give in to such high-powered tools. You can look into home security systems and the safekeeping of your valuables.
Life Cycle of the Project
Giving your home a new paint boosts your curb appeal and offers a return on investment. However, don’t scrimp on the paint job, and make sure it is professionally done.
When a pro does an additional project to your home, you or the future owners will benefit for a long time. It makes little sense to embark on cosmetic face-lifts that provide short-term value.
The Answer to the Question
Yes, upgrading your home adds value to the property. But how much the return is on every dollar and similar questions depend on several factors including but not limited to home-buyer trends in your region or neighbourhood.
Interestingly, there is a discrepancy in the popularity of a home project among buyers, its cost, and its value retained at the resale price, as noted earlier.
It is why you should do your homework for home renovations. Consult with a local real estate agent, and get a pulse of which specific areas of your house can benefit from a makeover and fetch higher returns. You might also want to discuss these improvements’ possible effect on your property tax.