Homeowners often jump on remodeling projects for the desire of living in an enhanced space, bringing opportunity for change, and an additional boost in the home’s value. I mean, wouldn’t you want a brand new kitchen with a new sink, new oven, and new countertops?
When it comes to adding value to your property, not every home improvement is created to
benefit. In fact, “some home projects can actually decrease your home value,” says Northwestern University data scientist Mischa Fisher, former chief economist at Angi, the contractor search service/house renovation site.”
The ROI, or return on investment that home upgrades can significantly vary from over 100% to 20%.Home improvements don’t a
lways add value. With that, even if they do, it isn’t the same as you actually making the money yourself on the project. There is a bigger difference between adding value and earning on your return on investment. “Some improvements might not add significant value because they are too personalized, going beyond the taste of the average buyer, or are not in line with the style and value of other homes in your neighborhood,” says Roman Smolevskiy, a general contractor and owner of A+ Construction & Remodeling in Sacramento, Calif.
You can figure out the project's value and return in two ways. One way being how the project
raises the tidal resale and the actual market value of the house. This shows how the value has changed since the addition. If you’re considering selling, this can be useful on the decision whether or not to borrow and your equity into it, after rounding up your assets. Your ROI is the measure of how much the home's value rises as a share of the project cost, typically expressed as a percent. For example, if a $4,000 garage door improvement adds $3,500 to the value of your home, you could say the project has an 88 percent ROI. This means you are able to recoup a large share of the project cost.”
Home improvements that do add value to your home
● Kitchen Renovations: update to be modern
● Bathroom Remodel: frequently used area valued by homeowners
○ According to bankrate.com, ““These are some of the most expensive remodel projects you can choose, but they rarely fetch more than $20,000 in value,” Nolan cautions.
“Keeping a bathroom clean, organized and appealing is better than spending $10,000 on
a computerized toilet – so get the value you want to see out of this project.”
● Basement Conversions
○ Finishing the basement makes the home more habitable and can pay off in the long run. This can average around $57,500
○ “These days, with many people working from home, turning your basement into a home office, for example, can ensure your house is more attractive than without it.”
Consulting with an agent before committing to any remodeling or big projects is most beneficial. Agents know valuable information regarding the market and insight on what buyers are looking for in your area. Agents often provide excellent guidance on which renovations are more likely to bring in buyers and increase your overall property value.