How much equity do they really add to your home?
The rise of HGTV binge watching has educated an entire demographic of home buyers and sellers. The television powerhouse is all about remodeling, and each night millions of viewers tune in to see Chip and Joanna remodel a dilapidated country home in Texas, or poke fun at potential buyers who just can’t get over the paint color in the bedroom of the home they are considering buying. HGTV’s television personalities would have you believe that renovations to a home can add value, and make for a quick sale, either immediately or down the road. But, real estate experts suggest that it really is not as simple as “renovate and reap equity”. So, how much value do renovations add to a home?
Kitchen Remodels
Remodeling kitchens are, perhaps, one of the most common home upgrades, but they may not yield the return on investment or the addition of home equity that you think they will. According to experts, a kitchen remodel can recoup between 60-120% of the cost, but it should be the right kitchen for the home. Experts suggest redoing kitchens with mid-range upgrades if you are living in a middle-class suburb or city. High-end appliances that are more at home in a restaurant's kitchen or countertops that belong in a Beverly Hills mansion can be off-putting to potential buyers, and detract from the value of a home. When redoing a kitchen ensure the size, style, and appliances match with the rest of the home and the neighborhood.
Additions
Additions can be a tricky investment, as they often don’t add the home equity that one would expect. Instead of building on, adding functional space within the footprint of the home is a wiser investment. Converting the attic into a master suite or finishing a basement to accommodate a playroom yield higher returns on investment. The reasons are pretty simple; additions cost more money than converting space within the existing footprint of the home, and they take away from the outdoor space of the home. Both are important, and you’ll want to keep your investment low to ensure a good return.
Adding a Bathroom
If you are the proud owner of an older home, you know all too well the pain of having just one bathroom for the family. Bathrooms are important to buyers and can add a great deal of equity to a home, so adding a bathroom can be a great investment. Experts suggest you can recoup between 80% to 130% of the cost of the bathroom in value to the home. While the ROI might be good, bathrooms are similar to kitchens; they need to fit into the style of the home; the placement of the bathroom also has to make sense to increase home equity. Using underutilized space can be a good choice, but make sure the flow and floorplan make sense with the new addition. You will need 18 square feet for a half bath, 30 square feet for a bathroom with a shower stall, and about 40 square feet for a bathroom featuring a tub. Keep the size in mind when adding.
Practical Upgrades
More practical upgrades can add a lot of home equity, even if they aren’t fun and exciting. Changing doors, upgrading to new windows, and adding central air and heating usually recoups 100% of the investment. Not only are they appealing to potential buyers, but they also save current residents big on heating and cooling costs. Experts suggest swapping out doors and windows as a quick, and relatively cheap, way to add value to a home, while saving big on utilities.
Renovating a home can make a house easier to sell, and add home equity in some cases, but you have to be careful and choose your renovations wisely. Speaking with a real estate professional, who knows your neighborhood and home style prior to plunging into major renovations is a wise choice.
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