Are you considering refinancing or selling your home? Then it’s useful to know its value, and a home valuation website is a good place to start. If you’re serious about selling, consider hiring a listing agent to get a comparative marketing analysis (CMA) report for more accurate pricing. If the CMA reveals a price range that doesn’t satisfy you, a home renovation is one way to drive up the value.
But before you hire contractors or start DIY projects, it’s a good idea to determine which renovation projects offer the highest return on investment. Surprisingly, many home improvements don’t add as much value as you might think. Very few housing projects break even in terms of home value, while overdoing a remodel can price a home out of the market. Keep reading to learn more about the true value of renovating your home.
Reasons for renovation
Carefully consider the goal of your home renovation before you begin, so you can choose the best renovations for the right situations. Do you need to upgrade to sell the house? Do you want to increase the value of your home for refinancing? Or do you simply want to make your home more comfortable while you live in it?
Even if a home upgrade is for quality of life, there may come a time when you want to sell your house. For this reason, it is wise to make upgrades that are not likely to hurt a future sale.
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Using home improvement calculators
If you’re considering remodeling, especially with the goal of selling your house, it’s a good idea to start with an online home improvement calculator. These calculators provide information on how much a project might cost, and some even determine a renovation’s likely return on investment (ROI). There are smartphone apps that also predict renovation values.
Leading indoor renovations
When you’re ready to start renovating, focus on the projects that will pay off the most. A kitchen makeover is a high ROI project because it doesn’t involve a full-scale demolition while still adding value. Buying new kitchen appliances, updating hardware, remodeling cabinets, installing new floors and painting walls can yield an ROI as high as 72 percent.
In addition to renovating the kitchen, bathroom remodels can yield between 70 and 78 percent ROI. These two areas provide plenty of value indoors alone. But if you want to take it a step further and finish an attic or basement, these projects can add an additional 65 and 76 percent of value, respectively, to the interior of a home.
Top outdoor renovations
When it comes to making outdoor upgrades, you might be surprised to learn that updates with the biggest return on investment are simple. Making minor upgrades to your curb appeal with basic landscaping, cleaning up the landscape, adding bark, painting your home’s exterior and installing a new garage door can produce a 238 percent ROI, according to a recent study by HomeLight.
Renovations with negative impact
While it seems like renovations always improve home value, there are times when upgrades can actually downgrade your home’s value. For example, too much wallpaper can negatively affect the value of the home. Additionally, bold colors have the potential to turn off buyers when trying to sell your home.
Reducing your home’s number of bedrooms by combining them can hurt the value, especially if houses in your area generally have a certain number of bedrooms. Extremely lavish bathroom or kitchen updates can also put you at a disadvantage. Finally, poor landscape features can have a negative effect on the home’s value.
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DIY renovations can damage value
Some people do their own renovations to save on costs. While this is often a good strategy, it may not be the case if the correct procedure is not followed. For example, any unauthorized structural changes to a home can be dangerous and cost you a lot when it comes time to sell. Many other home projects require permits, including roofing, window replacement, deck building, fence installation, kitchen or bathroom remodeling, and electrical work.
If you want to proceed with the DIY approach, first make sure you have approval from your local government and that your final project is approved for safety and legal reasons. Not getting the right permit(s) can not only block the sale of your home, but it can also result in fines or a lien on your home.
A final word
You may have heard of anecdotes where a lack of renovation hurts the owners’ home sales. However, too much renovation can also negatively affect a sale. Potential buyers may love the beautiful changes you have, but lenders may not feel the same way.
An overdecorated home can in some cases be almost as bad as a dilapidated one. This is because much of the property sales depend on comparables. Therefore, if your renovated home is valued much more than other houses in the neighborhood, potential buyers may not be able to secure a loan to purchase it. On the bright side, a cash buyer who is not at the mercy of a lender may be able to purchase your home.
When it comes to renovations, it’s best to consider all options – positive or negative – before embarking on the remodeling project.