Renovating your home can be an effective way to increase its resale value. But not all renovations are created equal — and none are guaranteed to repay 100% of their cost. However, by renovating strategically, you can increase your selling price enough that a significant portion of the renovation costs are passed on to the future owner.
The return on investment of any renovation is influenced by local market conditions and the quality and character of the work. Keep in mind that you’re renovating to the buyers’ tastes, not your own.
Find out which features and trends buyers are looking for in your area and avoid the temptation of improving the home beyond the average for your neighborhood. No matter how beautiful the result is, if it makes your home too expensive for your area, the return on investment will be low.
Fortunately, there are long-term studies that can help you decide which renovations will add the most to resale value. For example, REALTOR Magazine publishes an annual “Cost vs. Value” report that compares common remodeling projects and shows the payback homeowners can expect. As you’re about to see, they’re all projects that buyers can immediately notice, as opposed to structural improvements, like a new furnace or insulation.
Here are the top ten renovation projects ranked by average payback as a percentage of cost:
#1: Wood deck addition (80-85%)
#2: Siding replacement (75-83%)
#3: Minor Kitchen Remodeling (75-83%)
#4: Window Replacement (75-80%)
#5: Bathroom Remodeling (70-78%)
#6: Major Kitchen Remodeling (70-78%)
#7: Attic Bedroom Remodeling (65-76%)
#8: Basement Remodeling (65-75%)
#9: Two-storey Addition (65-74%)
and last, but not the least,
#10: Garage Addition (60-70%)
Another consideration is how soon you plan to sell. The more recent the renovation, the higher the return on investment. So it’s best to have a clear idea of your medium-term plans before you decide to renovate.
If you’d like to explore how renovating your home can help you pay for renovations without increasing your monthly payments, call us today!