How much do home renovations increase home value?
22 August, 2023 | Mikala Chapman
The increase in your home value due to renovations can vary widely depending on several factors, including the type of renovation, the quality of the work, the local real estate market, and the overall condition of the property before the renovations.
While some renovations can significantly boost a home’s value, others might not provide as much of a return on investment. Here are some key points to consider:
Type of Renovation:
Certain renovations tend to provide a higher return on investment (ROI) than others. Generally, kitchen and bathroom renovations, adding a deck or patio, increasing sqm’s, and improving curb appeal through landscaping are considered to be among the renovations that can yield a good ROI.
Quality of Work:
High-quality workmanship, design and materials are important for maximizing the increase in home value. Cutting corners during renovations can lead to lower valuations and potential buyer dissatisfaction.
Local Real Estate Market:
The state of the local real estate market plays a significant role in determining how much value renovations can add. In a hot seller’s market with high demand and low inventory, renovations might have a stronger impact on value compared to a buyer’s market.
Initial Property Condition:
Renovations tend to have a bigger impact on homes that are in need of updates and repairs. If your home is already in excellent condition, the potential value increase might be more modest.
It’s possible to invest too much into renovations than you’ll be able to recoup through a higher sale price. Be cautious about over-improving your home for your location, especially if it significantly raises your home’s value compared to other homes in your neighbourhood.
Location is a crucial factor in real estate. Renovations that are in line with the preferences of buyers in your area are more likely to have a positive impact on value.
Trends and Styles:
Renovations that align with current design trends and styles might be more appealing to potential buyers and can contribute to a higher value. If you are renovating to sell, stick to on trend but classic design choices, ensuring you appeal to a broad market.
Appraisal and Valuation:
Ultimately, the value increase due to renovations is assessed by real estate professionals and appraisers. Their assessment will be influenced by factors such as comparable sales, the scope of renovations, and the overall impact on the property’s desirability.
Return on Investment (ROI):
Different renovations have varying ROI percentages. Some might provide a ROI of over 100%, meaning you could potentially recoup more than the cost of the renovation when selling. Others might have a lower ROI.
It’s important to research and consider these factors before embarking on major renovations solely for the purpose of increasing your home’s value. While renovations can add value, they should also align with your own preferences and needs as a homeowner.
If you’re considering renovations specifically to increase your home’s value, consulting with a local real estate professional or appraiser can provide you with insights tailored to your area’s market conditions and the specifics of your property.