How Much Do Renovations Increase Home Value? What You Need to Know

Renovating a home is a common decision if a homeowner is planning to sell the property. It increases the value of a home, not to mention that it also increases the saleability of the house. But how much do renovations increase home value? In this post, we will discuss why you should consider renovating your home, what renovations are the most beneficial, and what you should avoid.

Should you renovate your home?

how much do renovations increase home value

Renovating isn’t always applicable to all properties. You have to consider a variety of factors to ensure that you’re going to benefit from the hassle and cost of home renovations.

So should you renovate your home? If the cost of renovation will increase the value of your home, then the hassle would be worth it. Aside from that, a renovation will give the following perks, regardless if you’re selling the house or not:

-Increase the selling value

Any addition to your home will directly increase its value. However, not all renovations are ideal. You should focus on improvements that will drastically increase the value of your home. Sure, all renovations or additions will add value to your home, but not all will reap a substantial increase. Below, we discuss the renovations you should consider and the ones you should avoid.

-Sell fast

A home with new additions will appeal better to prospective buyers. Knowing that something new has been placed in the property is a big selling factor. However, you must choose a home improvement that will provide the best value beyond aesthetics.

-Abide by housing codes

If the house is mired with black mold, termite damage, and other structural problems, finding a buyer would be difficult. Unless you’re willing to receive a lower payout from a cash buyer, you have no choice but to do renovations. Take note that lenders will not grant a loan if the house is not structurally sound.

-Add functionality

Functionality is king if you’re renovating your home. Regardless if you’re planning to sell it anytime soon or not, the additional functionality will make your home a better place to live at.

-Boost safety

If a home inspection revealed some hazards in your home, renovating such areas will be a good move. It will increase the selling value of the property when the time comes that you put it in the market.

How much do renovations increase home value?

According to real estate professionals, the payback of a home renovation is about 56% of the total cost of the remodeling. Meanwhile, changing things like doors and windows have a higher payback at around 75% of the total cost of the replacement.

However, these payback rates are highly dependent on the type of remodeling you’re going to do and your location. Properties located on the West Coast have a higher payback rate from a remodeling based on its resale value. Meanwhile, those in the Mid-Atlantic have a lower payback rate of 51%.

Be mindful of the type of renovation…

Like what we said, the type of renovation will also impact the payback value. For example, remodeling or renovations that improve the aesthetic appeal of the property reap the highest returns. This is followed by door replacements, deck additions, and stone veneer installation.

Remember that the scale of renovation is also a critical point. A major kitchen remodeling yields 59% of total returns. In comparison, minor kitchen renovations can have a payback of up to 81%. Why is this so? It’s a matter of taste. As much as you love a European kitchen, the buyer may not see the same appeal.

Focusing on improving the functionality without limiting the aesthetic appeal of your home will help a lot in boosting its value.

7 Home Renovations that Increase the Property’s Value

1.     Bathroom addition

One of the most common and most profitable renovations you can do at home before selling it is adding a bathroom. According to HGTV, bathroom additions and renovations is equivalent to 80% to 130% payback.

However, you have to be careful about what you change in your bathroom. Changing the fixtures and freeing up space are great choices. You can also install a separate shower room at the expense of the old bathtub.

Adding another bathroom will also improve the value of your home. Half baths measure only 18 square feet while full ones require a 30 square feet area.

You can hire bathroom remodelers, so you no longer have to shop and do the dirty work on your own. Most remodelers offer guarantees on their work.

2.     Kitchen renovation

Like bathrooms, kitchen renovations also pay off if you’re planning to sell your home. But how much do renovations increase home value? Properly renovated kitchens will yield up to 120% of the total costs. That is if you don’t overdo the changes.

It’s never a good idea to invest in a deluxe kitchen. Make sure that your newly renovated kitchen fits within the entire vibe of the house. You wouldn’t want a sparkly kitchen only to leave the entire house dull-looking.

Instead of wasting your money on fancy additions, consider getting energy-efficient appliances. Energy-star rated appliances use less electricity for the same performance. Also, some states offer tax rebates to homeowners with such appliances.

Lastly, new paint will go a long way. Choose a solid color that complements the motif of your home. Also, opt for non-VOC paint.

3.     Switching to energy-efficient windows

Another renovation that increases your home’s value a lot is installing energy-efficient windows and doors. Old window panes cause air systems to compensate since the cold or hot air escapes from the gaps.

Energy-star windows can save a household up to $500 a year from energy bills. Installing these new windows has as much as 90% payback upon the sale of the property. Also, some states give 10% tax credits to homeowners with energy-efficient windows.

It’s also a great selling factor for potential buyers. Take note that these windows are very attractive, especially if your property is located in an area that experiences extreme temperature changes across seasons.

4.     Updating fixtures

If your home’s fixtures are decades old, it might be time to change to modern ones. Aside from its aesthetic appeal, new fixtures are energy-efficient and will boost the resale value of your home.

The simple process of retrofitting your lights with LED bulbs instead of fluorescent lamps will make a big difference. Also, LED bulbs are cooler and will not contribute to the heat that your appliances produce.

Aside from that, consider investing in a programmable thermostat. Unlike manual thermostats, programmable ones can be set to turn the AC on and off on specific hours of the day. A programmable thermostat alone can slash heating and cooling expenses by as much as $180 a year.

5.     Renovating plumbing and electrical systems

If you have an old house, we recommend having the electrical and plumbing system checked. Leaks and plumbing issues can drive away a potential buyer. Aside from that, leaky pipes can lead to a slew of bigger problems: molds, termites, and more pests. Before putting your house in the market, make sure that the pipes are in good condition.

Aside from that, you should also pay a master technician to conduct a complete inspection of your electrical wiring. Houses that are more than 30 years old require rewiring with the help of a licensed contractor.

All of these will pay off once the buyer home inspection uncovered zero issues.

6.     Adding a deck

A deck makes your backyard more appealing to buyers. According to HGTV, a deck addition will yield up to 90% payback upon the resale of your home. External living spaces are always a plus point for buyers looking for a home.

The cost of deck addition is dependent on its size, seating, and other installations that you’d want to add. It can be anywhere from $1,000 to $10,000. Always match the grandeur of the deck on the overall look of your home. You never want the deck to stand out on first look only to lead the buyers inside a less appealing home.

A functional and equally aesthetic deck will set the mood on your home. Just make sure that buyers will have more things to be impressed about once they are inside.

7.     Installing better insulation

Lastly, invest in better insulation for your home. If your property is located in an area that receives thick snow, new insulation is a big selling factor. The more you make your house energy-efficient, the easier it is to sell. Most of all, its market value increases.

Homes with efficient insulation are easier to maintain. In fact, new insulation can save a household a whopping $2,500 a year from heating and cooling expenses. Make sure that you add new insulation on your attic and basement as well. Also, take the extra mile of installing a thermal leak detector. This is just an additional $40 or so.

Renovations to avoid

Now that you know the renovations you should prioritize, it’s also important that you know which one to put at the bottom of the list:

1.     In-ground pools

In-ground pools are very expensive, with installation ranging from $30,000 to $75,000. So how much do renovations increase home value? As much as it can boost your home’s market value, it also drives away some buyers. Families with small kids are less likely to purchase a home with an in-ground swimming pool.

Aside from that, an in-ground pool will shoot up the cost of homeowner’s insurance, not to mention its maintenance cost.

The only exception here is if you live in the south where the summer season can get scorching. In this case, an in-ground pool can be a profitable addition to your home.  

2.     Sunrooms

Sunrooms are great additions to a house until winter or summer arrives. A sunroom is surrounded by glasses, thus poor insulation. This will directly increase the cost of heating and cooling of a household.

According to real estate experts, recouping your financial investments on adding a sunroom is quite nil. For every $1,000 you spend for a sunroom, roughly $480 will get recovered. This is a measly amount, which isn’t worth it if you’re selling your home.

3.     Adding a garage

If you’re planning to sell your home, adding a garage may not be a cost-efficient decision. Building a new garage costs more than ten thousand dollars. As much as it can be attractive to a group of buyers, it’s less likely that you’ll recoup all your investments.

Anyway, if you intend to stay longer in your home, building a garage will contribute both to the home’s value and functionality.

4.     Roof replacement

If your roof isn’t heavily battered or damaged, a total roof replacement may not be cost-efficient. As much as roofs need replacing, it’s a very costly renovation. If you can risk not recouping a large chunk of the cost, you can give it a go.

The thing with new roofs is that it makes houses easier to sell. However, don’t expect that you can increase your selling price right away.

Overall, if your roof is tattered with holes and leaks, you may need to go the extra mile of replacing it. Even if this means you’re not going to recoup most of the expenses.

5.     Expensive garden landscaping

Lastly, don’t spend too much money on expensive landscaping. No matter how elegant your yard is, it will not increase your asking price. It’s totally fine to add shrubbery and improve the appeal of your garden. However, don’t channel too much of your money for this part alone.

Subtle changes are ideal since not all buyers will have the same taste as you. This way, you get to stage your property while allowing the buyers to design the garden once they purchased the house.

Final words

How much do renovations increase home value? It depends on the type of renovation, its extent, and your location. You must plan the change properly to ensure that you can recoup your expenses. Most of all, the renovation or addition should always boost your selling or asking price.