The Joint Center for Housing Studies of Harvard University estimates that Americans spend about $500 billion each year on renovations, creating modern and energy-efficient homes. While you can carry out some home improvement projects yourself, in some cases, it may be best to leave it to the professionals.
Whether it is garage door replacement or living room renovations, this guide will help you learn more about home improvements and whether they can increase the resale value of your property or how to find and talk with home remodeling contractors in the Bay Area and California.
Keep reading, as this guide contains information about the average payback ranges and resale value of home renovations and remodeling. Let’s get started!
Do Home Improvements (Renovations and Remodeling) Always Add Value to Your House?
There is a vast difference between adding value and earning a return on investment (ROI).
Some home improvements that are too personalized may not add any value to the house, as the average buyer may not share the same tastes or preferences.
How is ROI different than adding value to the home? When you consider remodeling your kitchen or any part of the home, you do not add the entire cost of the project to your house’s value.
The 2023 Cost vs Value Report by Remodeling, for example, states that the return on investment for replacing old windows with new vinyl ones that cost $20,091 is 68.5%. It means that the remodeling project does not increase by 68.5%, but the ROI adds value ($13,766) to your home’s price tag.
While some remodeling projects do increase the value of your home, it does not always mean that you’re going to make money. In the abovementioned example, you’re paying $20,091 for replacing your windows when it only adds $13,766 to the price of your house. That’s ROI and not profit!
Top Home Improvements That Add Value to Your Home
Some renovation or remodeling projects have historically been more valuable than others. The following are the best home improvements according to specialists in the housing market:
- Kitchen renovations
- Bathroom remodeling
- Energy-efficient home improvement projects
- Outdoor enhancements
- Basement conversions
- Boost your curb appeal
It’s essential to understand that trends evolve, which is why buyers and homeowners must stay updated with the latest changes in the housing market.
Top Home Improvements That Decrease Home Value
Furthermore, it’s crucial to understand that not all renovation or remodeling projects add value to your home. In fact, a highly personalized remodel or over-the-top renovation can adversely impact the price of your real estate.
Here are some improvement projects that local real estate agents believe may decrease the value of your house:
- Luxury lighting fixtures;
- A modern kitchen with all of the appliances and over-the-top renovations;
- Bright and bold colors on the walls; and
- Remodeling a bedroom and converting it into a closet.
If you’re planning to spend the next few years in your house, it’s okay to make such home improvements.
However, if you want to take a leave from the housing market, move into an accessory dwelling unit, or jump states, speak to a real estate agent before making any renovation or remodel changes.
How Much Does Remodeling Increase Home Value?
According to the 2023 Remodeling Impact Report, the following are the average payback ranges for some of the most common remodeling projects:
- Wood deck addition: 50.2%
- Minor kitchen remodel: 85.7%
- Bathroom remodel: 66.7%
- Major kitchen remodel: 41.8%
- Garage door replacement: 102.7%
While the above are just estimates, they can vary across different regional markets, home size and features, and personal situations, among many other factors.
What Are the Factors to Consider Before Considering a Kitchen Renovation or Remodeling?
Whether it’s a kitchen remodel or a bathroom renovation, the scope of the project plays a major role in the value that it may add to your home.
Here are some factors that you should also consider when thinking about a remodel or renovation:
- Current real estate market trends;
- The location of your house;
- Quality of work;
- Materials used in the project (wood, steel, cement, and others); and
- Buyer preferences.
Before committing to a remodel or renovation project, homeowners need to consult with a real estate agent. Equipped with valuable knowledge and insights, property dealers can guide you on the type of home improvement upgrades that can offer a good ROI and increase home value.
What Is the Difference Between Renovations and Remodeling?
Whether it’s kitchen remodeling or renovations, most people use these two terms interchangeably, but both of them are entirely different.
Renovations refer to bringing new life into an old, outdated place without altering its structure or layout. It may include adding new appliances, painting the exterior of the house, or buying furniture for your living space.
On the other hand, remodeling refers to major structural changes. It could include altering the home design, adding an accessory dwelling unit on your property, or replacing the flooring in your kitchen.
What to Consider Before a Renovating or Home Remodeling Project
Whether it is bathroom remodels or a renovation service, here are a few things that you should consider:
- Choose projects with the greatest return on investment to boost your home value.
- Think about renovations that appeal to prospective buyers.
- Compare the cost with the value of the bathroom remodel or any other project. There are many expert tips online to help you calculate the ROI.
- If you want to keep your house instead of selling it, prioritize your needs and invest in projects that help you live the best life rather than increase your home value.
Avoiding Home Renovation or Remodeling That Decreases the Value of Your Real Estate
By carefully choosing the home improvements and working with contractors with years of experience in the real estate market, you can avoid projects that can potentially decrease the value of your house. Keep in mind that buyers prefer less personalized homes, as they can often envision themselves in that space.
Any changes you make to your house should flow well with the rest of the home. If you’re renovating the exterior, make sure that it is consistent with the surrounding neighborhood.
DIY Homes or Professional Remodeling: Which Is the Best Option for You?
While remodeling or renovating your property might be challenging, you can do the easier bits yourself by watching some tutorial videos and investing in the right tools.
However, it’s best to let a qualified and licensed contractor handle a major kitchen remodel or similar home improvement project. You may require permits, special tools, or construction expertise, which only a professional can provide.
While DIY can save you money, it can also adversely impact your home’s value. Letting a qualified professional handle homes that require complex remodeling or renovation can prevent costly mistakes, ensure timely completion, and add to your house’s price tag!
Final Thoughts
Unless you’re a professional house flipper, your main concern should be making your home and property as functional and comfortable as possible for you and your family.
Homeowners can consider renovating or remodeling their house to increase their home value, but it’s crucial that they speak with a local real estate agent before embarking on a DIY project. This can help buyers save money and learn more information about the market.
Some projects, whether home renovations or remodeling, require skills and expertise, which is why it’s crucial to let professionals handle them. Compared to DIY, hiring contractors can offer a better experience and improve the resale value of your property in the area.
Before hiring a reputable contractor for a bathroom remodel or home renovations, homeowners must consider many factors, including checking the reviews, comparing per square footage cost with other companies, going through the list of products and services they offer, and reading their terms of service!
