Home Renovations – Which Ones Are Worth It?
By NICOLE MURRAY
Renovations may be timely and expensive, but the right project can increase the value of a home immensely.
While do-it-yourself projects can be beneficial, this piece will solely focus on renovations large enough that they typically require the homeowner to take out a loan to complete.
The Mortgage Note spoke with various real estate professionals and here are the top recommended renovations, the most problematic ones, and some other tips you should know before getting any home improvement project started.
Kitchen
One of the first rooms any potential homebuyer looks at is the kitchen and for multiple reasons: it is a room that is used every day, it is where people most commonly entertain, and redoing a kitchen while living in the home is incredibly difficult.
That means updating a kitchen could make your life easier now and yield a return on investment in the future.
“Updating an entirely outdated kitchen could give you one of the biggest returns because it is one of the biggest selling points on a property,” said Bill Maier, sales manager at United Mortgage. “Many people want an updated kitchen before renovating anything else.”
Gabriella Lisi, a realtor associate at RE/MAX Revolution, said open kitchens with counter space, light colors, and islands is what seems to be most popular right now. She urges homeowners to include seating space when designing the layout.
“I have seen people renovate their kitchen but not leave any space for seating which is a huge mistake,” said Lisi. “Whether it be a small four-person table or a massive dining room, make sure you leave a space for people to sit because this is a major flaw for those who love to entertain.”
Primary Bedroom/Bathroom
The primary bedroom and bathroom are other spaces that any homeowner or potential buyer will spend a lot of time in so it is no surprise they are at the top of the list for renovations that are worth it.
“People use their bedroom and bathroom every single day,” said Wade Dew, real estate agent for RE/MAX Revolution.
Dew said buyers take the master bedroom into consideration immediately when looking at properties.
“How big is the bedroom? Does the setup make sense? Is it aesthetically appealing? Make this room a jaw-dropper because it will only attract more people to your home,” said Dew.
Additional Bathrooms
Lisi said in a typical three-bedroom, one-bathroom house, an entire family has to get ready with just one shower and tub.
“One more bathroom can totally change the dynamic for the people living there,” said Lisi.
She said that while adults love stand-up showers, leaving a bathtub in place is a huge lure, especially for potential homebuyers with small children.
Finished Basements
Many people use their basements for storage. However, a remodeled basement can be transformed into many different types of spaces giving homeowners and potential buyers the freedom to really make the home their own.
“With finished flooring, this is another space of the home that can be transformed into just about anything,” said Rob Jensen, broker/owner of the Rob Jensen Company. “It could become an office, a play area for the kids, another bedroom – the flexibility is a huge attraction for potential buyers.”
Added Square Footage
Adding space or another room to a home can be extremely valuable because the more space a buyer has to work with, the more flexibility they have. Expanding can be especially beneficial in a vacation home where residences are otherwise small.
“Even a small addition can go a long way,” said Lisi. “Homes at the Jersey shore, for example, tend to be smaller so the extra space is something buyers will definitely notice.”
However, seek advice before expanding because depending on the cost of materials and labor, the return on investment may not be immediate.
“A warning regarding square footage,” said Dew. “It may not give you the immediate upgrade in value that you are looking for. The cost of materials is sky-high these days because of inflation, for wood especially. Plus, an expansion is not something you book and then the next day, the project is underway. There are permits, and finding the right contractor, which is very time-consuming.”
“Between the time and cost, I am not sure it is the first renovation homeowners should be looking to do,” said Wade.
Accessory Dwelling Units
Accessory Dwelling Units, which are growing in popularity, are built on a property but are completely separate from the home. Residents are utilizing these spaces for home offices, mancaves, playrooms, and more.
“As homes have gotten more expensive, I have seen many people use available funds to upgrade their home for their own personal gain and not even for the purpose of selling,” said Jules Zaphire, a real estate professional at The Pantiga Group. “With the work from home trend growing in popularity, having this separate space is becoming useful and even when it is time to sell, these spaces can be easily transformed into whatever the next homeowner wants.”
Solar Panels
Real estate professionals are on the fence about the value of solar panels because if they are not paid off, they can outprice a buyer from a home.
“The panels become an additional expense to purchase the property if they are not outright owned,” explained Dew. “The buyer will then have to qualify to buy the house and that extra monthly payment on top of it could make the home too expensive. If you are dead set on getting them, finance to own them so they belong to the homeowner when all is said and done. Leasing does not do much.”
Pools
A pool is another addition that real estate professionals seem split on. While some may see a pool as a fun, outdoor feature used to entertain, others may look at it as an addition that requires a large amount of work.
“I would go 50-50 on a pool,” said Zaphire. “I get the appeal. But many people see this feature as something that is only open four months out of the year and requires a lot of time and effort.”
Maier said this addition does not add much from an appraisal perspective and some people may even want to avoid this feature because it is so much work.
“It may be fun but in the long run, you could be shrinking your potential buyer pool in half,” said Maier.
Some extra tips to keep in mind:
Budget
“No matter the renovation, it is paramount to not overspend on the project,” urged Maier. “If you can redo your kitchen with solid products for $40,000 but choose to spend more than $100,000 on more expensive alternatives, you are probably not going to get your full investment back. Choose high quality, but also keep things as affordable as possible because otherwise, the renovation will backfire.”
Upkeep vs. Renovation
“Be aware that some projects do not necessarily count as upgrades,” explained Maier. “If you change your roof, install new air conditioning, or change the hot water heater, these are aspects of the home that are expected to be in solid condition when you put your home on the market.”
Don’t Make One Room Stand Out
“I understand everyone has a budget but I have seen someone update only one room or one bathroom in the house,” said Jensen. “This made the outdated rooms stand out that much more which can work against you. It won’t flow if you have a beautiful, white kitchen but brown tile from the 80’s in the room next door. Plan your renovations wisely.”
Don’t Overdo It
“There is such a thing as giving something too much of a personal touch,” said Zaphire. “Yes, it is your home and you want to make it yours. But just make sure to ask yourself, ‘Is there a way I can make this appealing to others when it is time for me to sell?’”
Bring In An Expert
When renovating with the purpose of increasing value just prior to a sale, trust the experts.
“If it’s possible, bring in an expert, like a stager or a designer, because they will know what to look for, how to set up your home, and what things in your home absolutely need to be addressed before showings,” said Jensen. “An agent will be honest but there is a fine line of being too aggressive because they make their living on commission. An expert will tell you like it is, which may be hard to hear, but will only benefit you in the long run.”