Text by Blair Korchinski
When considering a renovation, most people consider the value that the renovation will add to their home. While some renovations do add significant value to a home, others add little value but make a property more saleable.
The value a renovation will add to your house should be compared with the cost of the renovation and that should be taken into account when planning a renovation. Although increasing the value of your home is only one factor; comfort, lifestyle, environmental concerns, and living space are some others; if you plan on selling your home, increased value of equity should be a major consideration.
When it comes to evaluating how much value a renovation will add to your home, there are no hard and fast rules. Certain renovations add value in certain markets and changes in social values and neighbourhood demographics can turn what would be a money-maker a few miles away into a loss. It is important that you evaluate your individual property, your neighbourhood, and coming trends if you are planning a renovation mainly to increase the value of a property.
It is also important that the work be done properly. We’ve all seen those shows about “flipping” a house. We’ve also seen Holmes on Homes. Buyers have become much more discerning because of such shows and shoddy workmanship, code violations, and questionable design are less likely to pass muster as a result. It is a good idea that you consult with professionals at all stages, get the proper permits and inspections, and ensure that renovations are solving problems, not just covering them up.
Kitchen and bathroom makeovers are often considered to be great for increasing value, but that is dependent on the specific situation. In smaller houses or houses where the kitchen and bathrooms are too small or poorly situated, a simple make-over will have minimal effect on the value of the house. This is exacerbated by the relatively high cost of renovating kitchens and bathrooms when compared to the cost of renovating other rooms.
If hoping to add value to your house by renovating a kitchen or bath, it is recommended that you first appraise the situation carefully. It could well be that you are better off creating a new kitchen or relocating a bathroom than simply renovating the existing room.
Attention should also be paid to the cost of the renovation. Adding a $20,000 kitchen to a small starter home will probably not add $20,000 to the resale value of the house. The same renovation on a large house in an upscale neighbourhood may add that much or more to the value of the home.
If you are renovating a house with limited value, it is best to stay with mid-level products and designs common to other houses in the area.
The most profitable renovation, in terms of adding value to your home, is an addition or second level. This type of major renovation is expensive, but by adding living space to your home, as well as updating the style, you can build equity quickly and appeal to a set of buyers who are looking for a larger, more costly home.
Adding a second storey to a one-storey house will allow you to move the sleeping area upstairs and install at least one more bathroom. That will leave the main floor open for the kitchen to be enlarged, a family room or great area to be put in, and effectively double the square footage of your house. Since you are building on top of an existing structure, the cost of excavating and placing a foundation or piles is avoided.
Other additions are usually added to the back of the house. Common reasons for additions are family or great rooms, kitchens and breakfast nooks, or additional bedrooms or a home office, and sunrooms.
When having this type of renovation done, it is necessary to appraise your property and the neighbourhood. There is little chance of building value in, if your house is already in the upper range of houses in the area.
You should consider working with professionals from the very beginning, starting with an architect. While you can act as your own general contractor and hire sub-contractors to do the actual work, it often best to hire a general contractor who specializes in renovations. A good general contractor will have contacts among the sub-trades and will know how to join an addition to an existing structure seamlessly, so it looks like part of the original floor plan instead of an add on. Working with professionals will save you time and money in the end.