When planning to sell your home and aiming to get top dollar, consider these top 5 home improvements to increase the value of your home and maximize your return on investment.
Royal LePage Real Estate, the Appraisal Institute of Canada, National Association of Realtors and Remodeling magazine have done extensive studies on how to get the biggest bang for your buck.
Royal LePage Real Estate
In June 2018 Royal LePage polled 766 real estate agents and found that the top 5 home improvements that increase your home’s value for resale are:
Renovation Potential increase of your home’s selling price
1) Kitchen Greater than 12.5%
2) Bathroom Between 2.5% and 12.5%
3) Finished basement Between 2.5% and 12.5%
4) Efficiency upgrades (windows, heating) Less than 10%
5) Basement apartment Less than 10%
Tom Storey, a real estate agent with Royal LePage Signature Realty, quoted in the survey said, “Although many buyers can see themselves making home improvements themselves, it’s very hard for a home buyer to get excited or imagine living in a space that is run down or the decor reflects another generation.”
The survey also showed that most home sellers are willing to invest about 2.5% of their home’s value on renovations prior to listing their home for sale. This represents a home improvement investment of about $15,138 on a home valued at $605,512 which is the current median home price in Canada.
Appraisal Institute of Canada
While the Appraisal Institute of Canada agrees with Royal LePage that the highest return on investments when selling your home is to improve your kitchen and main bathroom, their experts have a few other renovation ideas to increase your home’s value for resale in their study:
Top 5 Renovations with the Highest Return on Investment
1) Kitchen renovation
2) Bathroom renovation
3) Repainting interior/exterior in tones with wide-ranging market appeal
4) Updating decor such as lighting, fixtures, countertops, flooring
5) Decluttering to showcase the features of your home better
National Association of Realtors
The Appraisal Institute’s findings of updating a home’s decor and decluttering as home improvements comes under what the National Association of Realtors considers as home staging. Their study looked at the affects of home staging to increase dollar value when selling.
The 2017 Profile of Home Staging reported that more than 30% of home buyers’ agents said staging increases home value by 1% to 5%. About 13% said home staging increases the dollar value by 6% to 10%.
Sellers’ agents reported even higher dollar value from home staging improvements such as:
– 29% reported an increase of 1% to 5%
– 21% reported an increase of 8% to 10%
– 5% reported an increase of 11% to 15%
The living room is the most important room in a home to stage, followed by the master bedroom, kitchen, and then the yard or outdoor space to increase a home’s value for selling.
Remodeling, a magazine for the construction industry in the U.S, has studied home renovation as a return on investment for resale for more than 30 years.
In their 2018 Cost vs. Value report, their experts studied 21 remodeling projects and how much value the renovation returned on investment for resale in 100 U.S. markets. These somewhat surprising home renovation ideas practically paid for themselves:
Project Return on Investment
Garage door replacement 98%
Manufactured exterior stone veneer 97%
Entry door replacement with steel 91%
Deck addition 82%
Minor kitchen remodel 81%
A handsome garage door showed the best return on investment especially if it’s a new four-section garage door with heavy-duty galvanized steel tracks. Beyond high-quality materials, the improved curb appeal appealed to home buyers.
Replacing siding with a stone veneer brought excellent return on investment at about 97% of your costs. Stone generally suggests luxury wherever it’s used on a home.
An attractive front door can return about 91% of your cost, particularly if the door is a 20-gauge steel door with panels for both security and light.
Contributing to outdoor living space, adding a wood deck holds more than 82% of its value when it comes time to sell.
As for a kitchen renovation usually topping the list of home improvements that increase the value of your home for resale, Remodeling experts say you don’t necessarily have to spend a fortune.
Instead, consider a minor kitchen remodel and you can still recoup about 81% of the cost. For example, change the kitchen cabinet fronts and not the boxes, update the countertop and replace the appliances. That might be enough to turn a kitchen from awful to awesome.
The sooner you do any of these home improvements the better because renovation and decor costs continue to rise for both building materials and labour.
So even if you don’t plan to sell your home right away, enjoy the renovations you do now, and reap the financial rewards when you’re ready to plant a For Sale sign in the near future.
Just be sure your home improvements feature neutral colours and use popular materials so the work is timeless and won’t date quickly. This will ensure that your renovations appeal to the widest range of potential home buyers from Baby Boomers to Millennials.
If you’re a seller in the Greater Toronto Area, contact us to get an estimate or arrange a home staging consultation, during which we can discuss the best pre-listing preparations and home improvements that should be done to increase the value of your home for resale.