The Real Value of a Renovation
When evaluating a home that has been renovated one or more times, there are many ways to proceed. Establishing the value placed on a renovation requires some knowledge and looking so that you can understand pricing of a home. In this arena, real estate agents and home inspectors can be incredible assets as they have seen many, many homes and understand the market and condition of a house with a very keen perspective. In some cases, the buyer will be considering a renovation of their own, so understanding what has been done already will be useful in determining the direction and scope of the work at hand.
The price of a home is essentially that which the seller is willing to accept. The value of renovations may or may not affect the offer, but the utility and quality of the renovation could swing a buyer’s preference for the home. One important factor to remember is that the value of the renovation is not only received from the potentially higher sale price, but also in the enjoyment over time of the renovated home. This variable is more difficult to assess, and may be esoteric in nature, but most quality renovations are worth doing as soon as possible so that this additional “enjoyment factor” can increase the true value of the efforts of renovation.
However, renovations can be expensive, time consuming, and inconvenient to the homeowner while they are being achieved. Many people who are not prepared for this suffer undue stress in their lives and relationships, and this cost is impossible to calculate. While the renovation may improve the value and enjoyment of the home, a deeper understanding of the market and a certain degree of luck combine to ensure that the sale price of the home will cover or exceed the cost of the renovation.
The fundamental hope is that the money put into a renovation results in an increase in the sale price. Often renovations are needed to simply bring a home up to the value and standards of other homes in the vicinity. Completing major renovations to put a home on the market may be attractive if the buyer is seeking to “flip the home” – that is buying an under-valued property, repairing it, and selling it at a profit. However, homeowners that are simply improving their own living space frequently run the risk of going over budget and over-valuing the work.
The key to evaluating a renovation is understanding that balancing act behind the end result – what was achieved, how was it achieved, by whom was the work done, and with what materials. The budget, time and inconvenience, and the enjoyment of the renovation – along with understanding the market and the scope of the renovation all become part of the equation in determining its worth.
How far did the renovation go? When all the fixtures and tile in that aging bathroom were replaced, did the owners replace the electrical wiring and water pipes, too? What are the pipes made out of? Copper or PVC, and what was the rationale? Ask the right questions and verify the answers during inspection to ensure that the project was completed as you expect it to be. If the wiring and pipes were in excellent condition and did not require replacement it is just fine to leave things alone. The key is to ensure that what was needed was actually accomplished. Doing too much or too little can cause a project to fail in the ultimate goal: to actually improve the home.
The Best of the Best
Workmanship – a job well done, whether by yourself or a hired professional, shows. Whether the job is cosmetic or a deeper fix, the work should be of high quality.
Design – well thought out and beautiful, with attention to use, style, scale, and materials; a great design can add the most value to the renovation.
Utility – the more something is used and enjoyed, the more the renovation is worth. Improved access, storage, or other everyday needs is among the most valuable work you can have done. When doorways, stairs or other access points get renovated – check for scale and materials that are user-friendly. Ensure that people can pass each other and that furniture can move where it is needed. Renovations that are difficult to use are a failure.
Lighting – lighting fixtures can be expensive and are very subjective. Consult with a lighting designer and use bright lights that are recessed and well-placed. Avoid the expensive, over-the-top dining room chandelier unless the intention is to use it for years.
Electrical/Plumbing – while not a “sexy” renovation, knowing that the two greatest conveniences of modern living are up-to-date and functioning well is a huge benefit to a homeowner. Document all repairs and renovations and keep the information on hand to show the quality of the work, since it is hidden behind walls and more difficult to assess.
Roof/Foundation/Windows – like electrical and plumbing, renovations that include improvements to a roof, windows or a foundation can add a measure of security as well as immediate and tangible value to a home. Preventing water damage and maintaining the structural integrity of the home is of the highest concern. Ensuring that quality work is done with an eye towards the style of the home is paramount in getting the highest return on this investment.
Kitchen/Bathroom/Basement/Garage – creating MORE timeless and classic space that is used frequently gets the most return in resale value. Storage is king in any of these spaces, but it should be useful and accessible.
Worse than Bad
Conversely, poorly designed renovations, including poor stylistic or configuration choices, shoddy workmanship or materials can deter a buyer or render your own renovation a failure. Avoid the trap of using the wrong materials: fixtures that are too big, or obviously bought because they were on sale/seconds, using the wrong windows, or inadequate materials for the project that won’t hold up in the locale or manner of use.
Fad renovations often lack long-term usability; that disco playroom or man-cave may look cool, but updating it again in a few years may be impractical. Everyone loves a steam room, sauna, billiard room or workout room, but maintenance and upkeep might make it less attractive. Furthermore, repurposing a bedroom or garage for a renovation of this sort removes spaces that future owners may find vital, so this further jeopardizes return on the investment.
Some renovations don’t go far enough. Redoing the kitchen or a bathroom without updating the wiring is an example of this. Putting in a bedroom, but failing to make it big enough or to follow the building code, is another example. Seek to find renovations that provide a lot of utility for the dollar, while accomplishing all that is actually required. If you really can’t afford to renovate, perhaps waiting is a better idea.
We all know when something is, “Just a little ‘off’.” One of the worst things is a great idea, done well and with fine materials, that just misses the mark; perhaps there is a corner that always gets in the way or that constantly causes someone to get hurt, or maybe it is a cabinet that opens in the wrong direction. Measurements that are off and made right with a work-around, all of these “little things” end up making a good thing into a frustration.
Don’t bash a lot of bedrooms. Converting a little-used bedroom to an office is one thing, but build-ins can diminish the ability to use the room as a bedroom again, potentially limiting the use of the room in the future. Consider carefully before repurposing a bedroom in a manner that limits the future utility of the space. The number of bedrooms in a home greatly influences the home’s value. At the same time, putting an extra bedroom in a basement is often a mediocre idea. Code requires two points of egress – a door and usually a window with very specific requirements, which may be expensive. Additionally, basement bedrooms are often unattractive spaces that require special attention to ensure they are not cold and dark.
Hope this article helped some of you who are thinking of renovating your home. With the Holiday Season in full swing, it’s a great idea to get prepped for the new year approaching us and get your home in ready condition if you are thinking of selling!
Have a wonderful Wednesday!
Candi & Ashley Choumas