When you are renovating your home with an eye to possibly selling it down the road, it is a good idea to spend a little time researching the impact of the work on the value of your home.
Homeowners can now get a better idea of the return on investment they can expect for a variety of home improvements through RENOVA, an interactive web-based guide provided by the Appraisal Institute of Canada, free of charge (www.aicanada.ca, Client Resource Centre).
RENOVA lists 25 popular renovation projects. Homeowners can enter the amount of money they plan to spend on a particular improvement, and the program will calculate the expected return on the investment.
Kitchen and bathroom renovations continue to top the list, as they have for years, and homeowners can expect to recoup 75% to 100% of the investment on resale. Among lower-priced improvements, a fresh coat of exterior and interior paint may also return up to 100% of the cost.
At the other end of the spectrum, installing a swimming pool, a whirlpool tub or a skylight may provide only a modest return, if any. In fact, a pool can limit the marketability of your home, as some buyers regard it as a liability.
For many common improvements, such as a basement renovation, rec room addition, flooring upgrade and window replacement, homeowners can expect a return of 50% to 75%. For some exterior work, e.g. landscaping, fencing and paving, the return is less, from 25% to 50%.
The Appraisal Institute cautions that RENOVA is a guide only. Many factors determine the value and return on renovation investment for a particular home, notably location, the neighbourhood and the quality of the work and materials. You may want to hire an appraiser to identify the current value of your home and its projected value after renovation.
When return on investment is a consideration, a professional renovator can help you develop a plan that allows you to achieve your renovation goals without over-investing. An experienced renovator can suggest a range of designs, alternative approaches, less expensive materials, and so on, to keep your project within a comfortable price range. You end up getting the best of both worlds—a great place to live, and a reasonable expectation of recouping your investment, when it is time to move.