When it comes to home renovations, the money invested in improving your homes will not always translate into an equivalent return in the selling price of your home. Therefore, careful planning is important if you want to increase the salability of your home and make a profit from your renovations.
Renovations do not have to be expensive or extensive to earn a high rate of return. In fact, one of the cheapest and easiest improvements yields one of the highest paybacks. According to a 2008 Study by the Appraisal Institute of Canada (AIC), a fresh coat of paint on interior walls returns an average 73 percent payback. So a $2,000 paint job could increase the home’s selling price by $3500.
The kitchen and bathroom are key areas to focus your renovation attentions. With average paybacks of 72 and 68 percent respectively, new fixtures, cabinets and tiles could be well worth the money and/or time and effort. The 2008 Renovations and Home Value Survey by the Appraisal Institute of Canada highlighted the top renovations and the average rate of return:
- Interior painting and décor – 73%
- Kitchen renovation – 72%
- Bathroom renovation – 68%
- Exterior paint – 65%
- Flooring upgrades – 62%
- Window/door replacement – 57%
- Fireplace addition – 50%
- Basement renovation – 49%
- Furnace replacement – 48%
The AIC has developed RENOVA, an interactive guide to the value of home improvements. The All-In-One Worksheet here can give consumers some idea of the return on investment for a variety of home improvements.