- 1 Set Up a Baseline Home Value
- 2 The Factors That Affect the Home Value
- 3 Understand the Purpose of Remodelling
- 4 Projects With the Highest Resale Value
- 5 Wrapping Up
While made of walls on all four sides and a roof above, a house only becomes a home when the residents inside make it their own.
This is why most people tend to remodel different parts of their home to suit their personal taste.
Some remodelling projects are for enjoyment such as pool deepening, while some are practical such as kitchen remodelling for better space management.
Remodelling can also help you in increasing the property value but most homeowners tend to be confused about the recovery rate.
They consider a 1:1 increase in home value for every remodelling done, whereas the recovery rate could be as low as 50% – 0% of the remodelling investment.
Hence it is important for you to understand how remodelling affects the property value of your home and also much would it affect to avoid owning a white elephant.
Set Up a Baseline Home Value
Before you jump ahead in getting the kitchen furnished with marble countertops, prepare a baseline.
Hire a real estate valuer to get the baseline value of your home. There is no point in conducting $100,000 worth of remodelling on a $300,000 house and expect to receive $400,000.
The recovery rate is the percentage of the cost of remodelling that you can expect to get back when reselling the house.
The rate is different for different remodelling projects with 50% to 80% on roof replacements and 50% to 100% on an interior renovation.
The Factors That Affect the Home Value
Current Market Value
The overall price of a home in your neighbourhood in the current market.
The workmanship on the remodelling project. A shoddy DIY project is a sign of poor workmanship that can give rise to future repairs.
This can significantly reduce the remodelling rate.
The Appeal of the Remodelling
For the end buyer, the final outcome is what matters. They may not be concerned with the amount of work you did on making the kitchen the way it looks now.
So, it might be difficult to convince them about the increase in the house value compared to the neighbourhood.
Moreover, the style you choose for the remodelling may be unique to your taste. E.g., If you plan to change the roof of your house, the different coloured shingles may cause your house to stand out like a sore thumb.
The remodelling needs to match with the decor of the rest of the house.
The Goal Behind the Remodelling
If you have replaced the existing lights to fit classical chandelier lights to give your home a Victorian-era look unless the buyer is also into it, the remodelling may be futile.
Similarly, a pool, while looks appealing, requires a lot of behind-the-scenes maintenance and may not be preferred by buyers.
On the other hand, a roof replacement or attic insulation that improves the temperature regulation of the house is eligible to be considered in the recovery rate.
Understand the Purpose of Remodelling
There are a plethora of remodelling projects one can take up but the purpose defines the boost in the Home value.
If the remodelling solves any critical flaw to the building, the cost (or a chunky portion of it) can be recovered when putting the house back on the market.
When considering the prospects of remodelling, it is important to understand the purpose behind it. The overall breakdown of the purpose can be divided as:
- Personal – Swimming Pool installation, Decor changes
- Necessary Maintenance – Change of wiring, roof repairs
- Value addition – Improved energy efficiency, roof insulations, the addition of new rooms
- Selling – Remodeling made specifically to sell the house
Based on the purpose of remodelling, it is advised to call in an experienced realtor before you finalize a contractor.
They can provide an insight into what remodelling projects are worth taking up if you are planning to sell your house after a while.
Projects With the Highest Resale Value
While remodelling, certain projects provide more resale value than others. The following projects are the best when it comes to returning on investment.
Most common remodelling project and considered to be a valuable addition to the house. A kitchen is a place in the house other than the living room that sees the most foot traffic and is also used more than other rooms.
So, people desire the kitchen to be furnished with modern conveniences and amenities.
Kitchen remodelling adds positive home value in the case of half a decade-year-old homes as you get the timeless look along with modern conveniences.
With age and time, the plumbing in the bathroom can degrade and most people use the opportunity to remodel the bathroom.
This way the bathroom is retrofitted with any modern facilities that make the bathroom more functional and worth more to the buyer.
The exterior of your house helps create the first impression on the buyer. By repairing the sidings and replacing the windows, the curb appeal for the house is improved and helps attract more buyers.
This includes window seals, door caulks, and landscaping elements, especially in the front yard.
Roofs and windows
Roofs replacement is a costly affair but an intact roof is a sign of good upkeep. While the roof replacement may not significantly increase the resale value of the house, a broken roof can significantly reduce the value.
So it is advised to hire a contractor at the first signs of roof damage.
The real estate market is full of buyers, sellers, and experienced realtors. Each has its own set of expectations and unique tastes when it comes to browsing property.
So, before you move ahead with a home remodeling contractors, it is advised to look into what type of remodelling gives you the best ROI and is preferred by the people in the market.