Major Home Renovations & Home Appraisals: What You Should Know
Are you planning house renovations and want to know the best home improvement investments? Or maybe you are planning to sell your house and are wondering about renovations that increase home value the most.
Whether you are planning to sell in the near future or not, most people want to be reassured that any major renovations they invest in will be reflected in an increased home valuation.
While any renovations that improve the function or look of your home are a good idea, some have a better return on investment value than others. If you are looking to sell quickly or have a limited budget, it is worth researching the renovations that increase home value the most.
As Vancouver Island’s home evaluation expert, D. Fritz Appraisals Inc. knows which renovations can add market value – and which will make your home more valuable to you but won’t necessarily increase the selling price.
Read on for our top 8 picks for renovations that increase home value in BC.
How is Home Value Measured?
When considering home value and how to increase it, are we simply talking about market sale price? According to the Canadian Appraisal Institute, value can be recognized in three ways:
1 – The Value of an Increased Sales Price – Renovations are done primarily to maximize value and profit from a sale.
2 – The Value of Getting to Enjoy or Benefit From a Renovated Space – Renovations are done primarily to improve your lifestyle in the home for the time you live there, which may also add market value in the future.
3 – The Value of Maintaining Your Property – Renovations that keep your home in a condition where it retains its market value.
If we focus on increasing the market sale price, the value of renovations is usually measured by the possible Return on Investment (ROI).
- For example, if you spend $20,000 on a renovation and the valuation of your home goes up by $20,000, that is a 100% ROI. On a home valued at $500,000, that would be a 4% increase in home value.
Renovation ROI will be influenced by the current value of your home, your local housing market, how soon you sell after renovations and how much you spend.
A good home appraiser can help you decide what home renovations will provide the best value return on investment in your area.
Our 8 Top Picks for Renovations That Increase Home Value
When deciding what renovations to complete, consider the following 8 home renovations which have historically proven to bring the biggest return on investment:
- Kitchen Remodel: 75% – 100% ROI
At the heart of the modern home, a kitchen can make or break a sale. A functional and neutral refresh will increase value and saleability. Consider new appliances, backsplash, cabinetry or hardware.
*Unless you plan to live with it for a while, don’t go too high-end, as the return will not be worth it.
- Bathroom Refresh: 75% – 80% ROI
Buyers appreciate a fresh, clean and modern bathroom. Consider adding double sinks, upgrading the shower unit and refreshing the paint for the best return on investment.
- Interior and Exterior Painting: 60% – 75% ROI
Fresh paint gives a high return and increases buyer appeal. Keep colours neutral inside and in keeping with your neighbourhood outside.
- Structural Upgrades: 75% ROI
Buyers will be put off homes that are badly maintained. If your roof, windows or heating system needs upgrading, prioritize those over cosmetic changes.
- Flooring: 100%+ ROI
Remove wall-to-wall carpeting and replace worn flooring for maximum ROI. No need to install expensive hardwood. Buyers are looking for flooring that is clean and easy to maintain.
- Energy Efficient Additions: 50% – 75% ROI
Such as upgrading your heating and cooling or adding solar panels. Anything that reduces energy use and costs will attract buyers and increase value. For the best ROI, enjoy living with these upgrades for a few years before you sell to reap the benefit of lower bills.
- Create More Living Space: 75% – 100% ROI
Buyers are looking for the most usable square footage for their money. Add extra space with an addition or basement renovation, but keep the finish neutral so buyers can choose how to use it. If you remain in the home, a basement rental suite can help you recoup the costs of the reno.
- Curb Appeal: 80% – 90% ROI
First impressions count. Add value by painting or replacing your garage and front doors. Clean siding and replace any damaged sections.
TIP: Keep receipts and details of any renovation work done to prove the value and quality of the changes.
If your time and budget don’t allow for larger scale renovations, but you want to do something to increase both market value and saleability, this list of 11 easy renovations to increase the value of your home from HGTV star Mike Holmes is a good starting point.
How Your Appraiser Can Help You Choose the Best Renovations to Increase Value
Property appraisers understand the local housing market. They know what investments are giving good returns, can help you understand what your home may be missing compared to local comparative properties, and can give you an idea of what the value may be once improvements are made.
Appraisers can also provide post-renovation evaluations – so you can see what value you’ve added to your home from the work you’ve completed.
In addition, if you’re looking to get financial support for major renovations through a bank loan or mortgage extension, appraisers can provide the valuation your financial lender may require.
Call D. Fritz for Your Appraisal Needs
At D. Fritz, we pride ourselves on being on top of the local housing market, including understanding what buyers are looking for and what renovations will add value and attract buyers’ interest.
We offer professional real estate appraisals throughout southern and central Vancouver Island from Nanaimo to Victoria and the Gulf Islands.
Contact us today to order an appraisal or for more information on our services.