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The Value of Renovations
Renovating your home can increase its market value. However, contrary to what many people believe, the return from most renovations is less than the original cost of the renovation.
What should you renovate, and when? I divide popular renovations intro three categories: Essentials, Replacements and Upgrades, and Add-Ons. Below, I detail how much of the renovation cost you can expect to recoup when you sell your home.
(Note: The values in these tables are approximations. Costs show expected prices for new materials installed by professionals. Each home is unique, and will return more or less value on particular renovations depending on how appropriate they are to the home.)
Some of the things we think of as 'renovations' are, in fact, part of the essential upkeep of a home. If this upkeep is neglected, there is a risk of turning off potential buyers. It is impossible to estimate the return value of these renovations because of the effect that neglected repairs can have on your home's selling price. However, if you are planning to spend money on renovations before selling, you are likely best served by spending it in these areas first:
|Re-shingle aged roof||$2.50/sq.ft. or more|
|Replace windows and doors||(varies by need)|
|Repaint exterior||$300 to $2,500|
|Replace furnace||$2,000 to $5,000|
Replacements and Upgrades
The renovations in this category are not essential, but can still significantly add to a home's value. These renovations often help to improve a home's impact on potential buyers. The 'expected return' for these renovations will only be fully realized if the replacement is of higher quality, or if the existing item is damaged or worn out.
|Strip & refinish hardwood floor||$1.50 to $3.50/sq.ft.||80%|
|Paint interior||$200/room or more||75%|
|Replace kitchen counter, cupboards, or built-in appliances||(varies)||70%|
|Renovate bathroom (replace fixtures, cabinets, and wall tiles)||$4,500 and up||70%|
|Replace flooring||$3.50/sq.ft. and up||60%|
|Re-pave driveway||$3 to $5/sq.ft.||50%|
|Replace ductwork or heating/cooling systems||$2,500 to $6,000||40%|
These renovations do not have as much impact on your home's value, because they are not necessarily considered desirable to every buyer. Your best move is to do these renovations if you wish to enjoy the results – not as a financial investment.
|Finish basement||$20/sq.ft. and up||50%|
|Gas Fireplace||$1,500 to $4,000||50%|
|Add new room on main floor||$80/sq.ft. and up||40%|
|Wood-burning Fireplace||$4,500 and up||30%|
|Add Garage||$12,000 and up||30%|
A note about 'over-improving'
You will only realize the return listed above if an improvement is appropriate for your type of house and area. There is nothing wrong with refining your home by putting in higher-quality materials, fixtures, and appliances. However, the people buying in any given area are looking there because they can afford that area's average home. Beyond a certain point, additional renovations will have little effect on your expected resale value.
Do you want to know more about which renovations are most valuable at resale? Just ask me, I'll be happy to help.