Home Renovation and Market Value
Home Renovation and Market Value.
The link between home renovations and the real estate value of a home is a rather simple one but one that people don't tend to explore. The end result deals with the resale value of the home to potential buyers but before we get to that point, we need to return to the beginning and see why homeowners make changes, what kind of projects they get into, and whether the ROI is good or not.
Why do people do home renovations?
Some people think of renovations are something that will make their house feel new or will increase their comfort, and not as something to add value to the home. It can do both.
The return on investment for a kitchen remodel.
A kitchen remodel isn't just about having more room on the counters or new cabinetry. A rustic kitchen has its charms but an energy-efficient kitchen with upgrades to its core systems will provide a return on investment on several fronts.
Remodelling a kitchen is one of the most common renovations. A replacement for the fridge or oven affects something crucially important for a home: food. According to one too many blog posts, the kitchen is the heart of the home and there's a reason people repeat that. It is both a personal and convivial space, it is a core living area where families spend time together.
A high-end kitchen, or at least a current one, helps with cooking better food, saving time preparing meals, and enhancing precious memories. Not only does a kitchen remodel benefit you, but potential buyers are also willing to pay a premium for something that they don't have to change themselves. The price tag then doesn't just include your monetary investment but the time spent and the headache of dealing with the renovations.
The benefits of a bathroom renovation project.
A bathroom doesn't have to be falling apart for it to be a candidate for renovation. It's a room used by the whole family every single day. Upgrades there ripple out throughout the home.
Home renovations that deal with a bathroom can be rather heavy-duty. Beyond design changes, a project like that can a toll on you and your family. While you can get takeout or cook something simple during a kitchen renovation, a bathroom fulfills some critical functions. The cost, remember, isn't just monetary.
This is why better water pressure, nicer finishing touches, and new tubs are not the only changes people make. Decorating, electrical work, and plumbing can all completely transform a bathroom. That transformation is what can add value to a home for potential buyers.
Unless you are trying to attract people looking for a fixer-upper, a beautiful new bathroom can increase the resale value of your property - even turning it into high-end real estate if you make the right choices.
What should renovations focus on?
Not all renovation projects are equal. When you're dealing with an investment like remodelling, you're going to want the price to be worth it in the end.
On average, a home's value can only increase from the right renovation but the return on all the costs can be optimized if you prioritize the following two things:
- Energy: being energy efficient will benefit you, the next owner, and literally everyone else. Sustainability is not about deprivation but rather about making the best use of our current tools to use fewer resources than we have to to accomplish a task.
- Space: if you remodel your ground floor but need to tiptoe to get to your kitchen and then need to squeeze past a door, then the home's layout has made it less livable. Value for a home comes from comfort and efficiency, a new floor plan that promotes clutter and narrow passageways will cost you in the long term.
When are home renovations not a good idea?
If you intend to move within a year or a few months, then it's not the best time to take on new projects. While some remodelling can fetch a premium, you don't want your home's sale to be delayed by a project that took too long.
You won't be able to enjoy the benefits, will have to deal with all the costs, and unless you can sell fast and for more than the project cost, you will not have that money to invest in your new home.
Crucial moments in your family's life might also complicate things. A newborn coming to the house, a pregnancy, the end of high school, and more are very valid reasons to wait before going into a new project.
Should you renovate your home?
There is no one-size-fits-all answer to this question, as the decision of whether or not to renovate your home depends on a variety of factors specific to your individual situation. Some factors you may want to consider include the age and condition of your home, your budget, and your plans for the future.
If you are unsure about whether or not to renovate, it may be helpful to consult with a contractor or real estate agent who can help you assess your needs and give you advice on the best course of action.
Renovated homes sell way faster than outdated ones but a master suite with wood flooring will increase the value of your home than something that buyers tend not to like. Every investment is a risk but some are safer than others.
If you do decide to renovate, consider carefully who should manage the project and if you need to hire any outside experts like an architect or a contractor. If you plan on managing it yourself, think about how much time and money you want to invest in the renovation process and whether or not this is feasible for your lifestyle given your other commitments and obligations.
If you do choose to hire a contractor or renovation manager, make sure they have the necessary experience and ask to see examples of previous work. Also, be sure to set out your needs clearly and draw up a contract before starting the project. If you plan to sell your home after renovations are complete, think about how this could affect your neighbourhood and the property value of your home.
For some renovations, you might need a permit for big changes like structural changes to the home or adding garages. It's best to get the required permits in writing and keep copies - it's not like the little fine print at the end of an article stating All Rights Reserved, not respecting these permits can incur hefty fines or legal troubles.
When you've thought about all these things, you'll be better equipped to make an informed decision about whether or not to renovate your current home. The link between home renovations and the real estate value of a house is rather clear but it's important to consider that even if you do want to ensure that you get your money back when selling, renovations should be done for more than just an ROI. Satisfaction, pride, and living in a comfortable home are also great reasons to get started on renovations.
Whatever your motivation is, doing renovations without the help of unbiased experts can be dangerous. You'll have to deal with permits, unexpected expenses, and workers who might not do exactly what you want.
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