Most homeowners make at least a few home improvements to enhance the enjoyment and comfort of their homes. However, not everyone considers how those renovations will affect their home’s value. Often people focus on the expected upgrades such as major bathroom and kitchen renovations, but is this really the best approach when it comes to return on investment (ROI)?
Because buyers have both practical and emotional reactions when viewing your home, there are a few things contributing to where you will see the best ROI. If you are about to spend on a major renovation with raising your home value in mind, the top nine recommended renovations might surprise you. Here we review the different types of renovation values as well as the nine surprising top earners for home renovations/upgrades.
Three Types of Renovation Value
First, you have to understand that when renovating your home, there are three different ways to calculate value:
1. Increasing the value of your home selling price
This would include:
Updating décor such as lighting and plumbing fixtures, countertops, replacing or refinishing worn flooring
In this case, you can appeal to a broader audience of buyers, as these details universally add value in the home buyers’ eye. They have immediate impact as they improve the appearance of your home and help neutralize the space while showing off its best aspects.
2. Adding value based on the enjoyment of the renovations
This covers upgrades such as:
Sunrooms / Additions
Decks / Fences
Many of these features would appeal to a smaller selection of buyers, such as the basement or garage renovations, while others like the deck and landscaping can increase the overall appeal of your home to a broader selection of buyers. Some provide more space to enjoy, while others simply improve the aesthetic enjoyment.
3. Maintaining the value of your property
Finally, this is a more practical application of upgrades and replacements:
Heating and cooling system
Windows and exterior doors
Repairing structural defects
These offer bigger payoffs when it comes time for a home inspection as when these elements are found faulty or outdated it can cost you during negotiations.
Every home will have different needs, so you must consider those needs and determine where best to invest your money.
Nine renos with the highest ROI
This brings us to our list of recommended renovations with the average ROI percentages:
Average ROI: 100 percent
This is the biggest surprise because people don’t view decluttering as an upgrade. However, by simply investing your time in a complete decluttering of every room, closet, storage space, your attic and garage, you will allow buyers to view your home without distractions. You also show your home has ample storage space.
2. Garage Door Upgrade
Average ROI: 97.5 percent
Interestingly, replacing garage doors was the largest gainer. Garage doors offer improved curb appeal, security and functional value thanks to ease of use. This very reasonably priced upgrade can help you see as close to a 100 percent return as you can expect.
3. Stone Veneer Exterior Upgrades
Average ROI: 94.9 percent
If your home features ho-hum brick or vinyl on the exterior, you might have noticed homeowners in your area gussying up their exteriors with trendy stone veneer. This is especially popular in sub-divisions where people are trying to get away from that cookie-cutter look. This is a great way to add curb appeal when selling as it gives your home a modern, custom look that will stand out from the other homes in your area. If you find a stone veneer too costly, you can upgrade your siding and see a 75.6 percent ROI.
4. Minor/Midrange Kitchen Upgrades
Average ROI: 80.5 percent
While seeing kitchen renovations on the top-recommended upgrades is no surprise, what might surprise you is how much you actually need to spend. Many people go overboard and start tearing out walls and redoing their entire cabinet system when in fact, minor kitchen renovations are actually the better way to go. Minor kitchen renovations saw more than a 20 percent better return than major kitchen renovations that sat at just 59.7 percent.
5. Wood Decks
Average ROI: 75.6 percent
This addition to your backyard hits two notes for buyers with both the enjoyment factor and perceived value in dollars and cents. Decks don’t have to be fancy, just in excellent shape and well-thought-out to provide an outdoor addition of living space. A surprise to note here is that while it might seem you should be looking at new composite materials over wood, wood gets a 6.5 percent higher return.
6. Entry Door Replacement
Another curb appeal element, this upgrade also has practical maintenance applications. A new entry door not only looks stunning but also provides improved energy savings thanks to added insulation. This is another example where materials matter, with steel, seeing a higher ROI than fiberglass.
7. New Windows
While this isn’t an exciting choice, you can greatly improve the appearance and energy efficiency of your home with new vinyl windows. They also reduce red flags for buyers such as condensation, signs of leaks and plain “ugly” windows that make your home look less attractive.
8. Roof Replacement
This is a very practical maintenance upgrade that many homeowners don’t consider unless absolutely necessary. However, it does check two boxes as a new roof is both a maintenance renovation and adds aesthetic enjoyment. Remember home inspectors will report the condition of roofs including an estimated time the roof will require replacement. Even the prospect of having to replace a roof in five years can scare buyers away.
9. Midrange Bathroom Remodel
Average ROI: 67.2 percent
While bathroom renovations, in general, are not much of a surprise, the fact they aren’t in the top 10 is. As well, you might be surprised that like kitchens, it just takes a midrange remodel to impress buyers to see the best ROI. Here is how bathroom ROIs breakdown and compare to the midrange remodel:
· Universal bath remodel: 62.5 percent
· Midrange bathroom addition: 60.6 percent
· Midrange master suite addition: 59.4 percent
· Upscale bathroom addition: 58.1 percent
· Upscale master suite addition: 50.4 percent
As you can see, choosing the wrong type of bathroom remodel can cost you as much as a 16.8 percent.
The Dangers of “Over Improving”
Our real estate agents at OnlyWith.ca can help you avoid “over-improving” your home. Your renovations have to make sense for your neighbourhood and the buyers it will attract. Otherwise, you are at risk of losing money. Good renovation decisions and improved ROI always boil down to dollars and “sense.”