How to Add Value to a Home Through Renovation
Make sure your remodel will actually increase the resale value of your home
By Andrea Campbell
You want to add "engineered value" with a renovation, but if you overdo -- if the upgrade is not woth the price -- it may be money wasted. There are generally two ways in which a property is assessed: by market value and market price. Current market value is derived by taking the selling price of homes in the vicinity and averaging them for a value figure. Market price, on the other hand, is more emotional; it is the price someone will pay for a particular home.
- What You Need to Know
- Get a real estate comparison of homes similar to yours for a current market value.
- Look for an assessment of which renovations will add value, adjusted for age and condition of your home.
- Obtain cost estimations for completing desired renovations using three price bids from experienced contractors. Subtract the added-value renovation -- or the engineered value -- from the costs to see if it will pay off.
- Create a budget plan, including material costs and labor.
Visit area open houses to get a feel for what's on the current market in your neighborhood. Call local real estate agents for ideas on what contemporary homes offer for the money, pick up listing sheets and find out what typical selling prices are.
Figure out your best ROI or "return on investment." Work on the home's shortcomings first. For example, a home with only one full bathroom could use another bath -- or even just a powder room -- for added value.
Paint with fresh neutral colors, give kitchen cabinets a face lift with new fronts or hardware, or update with new flooring versus the original '80s vinyl you already have. These types of cosmetic fixes, your low-cost renovations, may be all you need, and many such projects fall into the do-it-yourself category.
Choose upgrades carefully. Nix any taste-specific or extravagant upgrades. Over-priced, top-of-the-line appliances may be nice but not necessary. Don't expect to recoup your outlay, whereas with new siding, homeowners can expect an average 83 percent return on investment. Homeowners who simplify details can save money; for example, a backsplash can be painted temporarily, saving $1,000 dollars or more. This is a logical choice, as you can always add a tile backsplash later.
Redo important rooms, such as the kitchen and bath, which will help to augment the price. Remodeled kitchens typically return 75 to 100 percent of their costs, and bathroom renovations fare even better, returning 100 to 104 percent of your investment at selling time.
About the Author
Andrea Campbell is a regular contributor to DexKnows. She has been writing professionally since 1991.
Browse By Top DexKnows Cities
- St Paul
Matching a wall color to the furniture involves finding a few colors that coordinate and complement the larger pieces in the room. Find out how to choose the best possible wall color with help from a professional painter in this video on interior painting tips.... Watch Video