Remodeling for resale value is a tricky evaluation. The amount of the increase will depend on the area of the home, the quality of the remodel, and the upgrades added. For example, projects like kitchen renovations will return (on average) 90% on the investment. As the property value increases, so does the return on the investment in your remodel.
In this article, we'll dive into the five crucial questions you need to answer to increase your home's value effectively. Whether you're planning to sell or simply want to enhance your property's worth, understanding these key factors is essential.
The answer to this question, like many other remodeling quandaries, is it depends! Yes, remodeling is worth the investment for the increase in satisfaction with your living experience. Is living in a house you spend a lot of time in worth the renovation investment? Based on the American Time Use Survey, we spend about 62% of our waking time at home. In contrast, we only spent about 50% in 2019.
Before you decide what areas of your home need renovation, ask yourself how much value you assign to being happy and comfortable in that space. Renovations are likely to increase the resale ability and value of your house. We all know that updated, attractive homes sell quicker than outdated homes, but be sure to evaluate what you value first before the potential return on investment.
Seward Park Whole House Remodel
While it may not be in the budget to do any major renovations, there are a few things to keep in mind that may drag your home value down.
Removing bedrooms can have a negative impact on prospective buyers. For example, converting a 3-bedroom home into a 2-bedroom house with a walk-in closet or turning a bedroom into a dedicated office space could decrease value.
Removing a bathroom to make a closet or other space will have a significant negative impact on the value of your home.
Taking out the only bathtub in the home may not reduce the value of the house, but it may narrow the number of potential buyers who would be interested in the home. People with young kids or those considering starting a family will want at least one bathtub in their home. You may be excluding valuable prospective buyers.
Too much personalization in the décor, finishes, countertops, cabinets, etc., can also impact the number of people who would be interested in purchasing the home. When someone walks into a house, and all they can see is everything they will need or want to change, it’s a harder sell. It becomes increasingly difficult to convince someone to buy a house when they walk in and immediately see all the things they want to change or improve.
Unsightly curb appeal can immediately set a negative tone for the buyer. Remember, this is the first thing people see when they arrive at your property. If you have a broken front doorknob, broken gutters, unkempt landscaping, and a cracked driveway, those are all considerations the buyer will weigh when deciding to make an offer or not.
There isn’t a set rule of thumb on how much you “should” spend on a home renovation. This is an individual decision depending on property location, the condition of the house, the neighborhood and nearby school system, how much value the investment will add to the property, and what value you assign to an update.
Just because 50% of your house value is $500,000 doesn’t mean you have $500,000 to spend on a renovation. Alternatively, maybe you do have $500K to remodel with if you purchased your house at a good price and the neighborhood would support the added value. Having the money to remodel with, however, doesn’t automatically mean it’s worth spending.
We recommend consulting with both your real estate professional and a trusted building professional when deciding if renovating to sell is in your best interest.
Appraisers are looking at not only the space but also the quality of the space. Professional appraisers can tell a well-executed remodel from a poorly executed remodel. This is why you should heavily consider the costs and benefits of remodeling options and always work with a trusted professional builder. Pouring the money into a renovation that ends up working against you is heartbreaking.
There is never a guarantee that your property value will increase based on the updates you put into the home. However, well-done remodeling projects typically return 80-90% of the cost of the project to the value of the home immediately. The additional value you get is the enjoyment of living in a beautiful and functional space. Homeowners should remodel for their own value, not for resale value.
When you’re ready to begin planning your renovation project, we’ve created some tools to help you along the way. Download our eBook, "Space Planning 101: How to Renovate Your Home Layout to Improve Functionality."