Why did the house down the street sell for more than yours? It’s the same vintage, similar design and property size, probably the same condition as yours… why do some homes – regardless of comparable location, age, design etc. – command higher prices?
Well, the difference likely is due to recent renovation. Regardless of the economy and market conditions, homes that have been renovated within five years of the date of sale command higher prices than homes in the area that lack similar updates.
There are numerous home renovations that can increase a home’s overall value, including both real cash value and personal value derived from enjoyment of the finished product, however kitchens, bathrooms, and basement renos result in your best return on investment.
An article by Robert Bell (May 5, 2010) spells out some interesting points about adding value:
“It’s no secret that kitchens and bathrooms can make or break a sale. An outdated kitchen or bathroom can turn a potential buyer off just as easily as an updated kitchen or bathroom can sell a home. For a number of years, kitchen renovations topped the list of return for investment in home renovation projects. While the price of a remodel has increased and the return has fallen slightly, the kitchen is the one area of the home people focus on first. If you’re living with an outdated, ugly kitchen or one that is not functional, the cost of a renovation will be recouped by personal enjoyment alone but you can also recoup up to 80 percent of the cost if you sell your home within five to seven years.
Similarly, bathroom renovations have been in the top five of investment versus return value for years. Today’s trends lean towards the spa-style bathroom, with a preference towards separate showers and tubs, double sinks, and even seating areas. Even in homes where bathroom space is limited, there are a number of improvements that can be made to increase the functionality of the bathroom and the value of the home.
Major renovations may be out of reach for some homeowners’ budgets, especially in the current economy, but some minor renovations can also add value to a home. One of the leading minor renovations in terms of cost and return is the home’s entry door. Replacing the entry door with a mid-range replacement door helps provide curb appeal, a welcoming entrance and energy efficiency all at the same time. Another minor renovation that adds instant appeal, and thus value, is detailed trim work like chair railing, crown molding, and cornice board. Carpeting and paint are also minor renovations that add value and appeal.
As more people focus on energy efficiency, replacing major mechanical systems, such as a furnace, air conditioning system, water heater and windows, with energy efficient equivalents can also add instant value to a home. Not only will your energy bills be reduced but the resale value of the home will improve. A new roof and insulation will add to the investment.
If you’ve already focused on the inside of your home or are confident that the interior is at least moderately up-to-date and efficient, turn your focus to the outdoors. In 2008 and 2009, the term “staycation” was coined to refer to people who preferred to stay home and enjoy downtime over traveling in order to save money. With this trend came an increased demand for outdoor living space. Decks, patios, and outdoor kitchens conducive to entertaining and relaxation are improvements that are in demand. In fact, like kitchens and bathrooms, decks are in the top five of renovation returns.
Investing a large sum of money into home renovation for the sole purpose of resale should be considered carefully and you might want to consult a real estate expert in your area before you decide to invest in a major renovation project. However, if you have budgeted for a large scale project because you want to enjoy the improvement while adding potential value to your home, invest in the project that is most important to you now. It may be unrealistic to expect an increased sales price of $100,00 on a $50,000 renovation but you can expect to recoup some of the cost if you sell your home before the update becomes outdated again.”
If you would not only like to add value to your home, but also be able to enjoy a new bathroom or kitchen for yourself, come and see the Ultimate Kitchens & Bathrooms showroom in Hawthorn East, Melbourne, and chat to one of our designers.