We had a few questions about home renovation, so we went to our very own Scott Korbin of COMPASS, the Scott Korbin Team, for the answers.
Does renovating a home increase its value?
“I cannot imagine a situation where renovating a home DID NOT increase the property value,” Scott said.
He did add two significant exceptions:
1 – When the property can be rezoned (by itself) or as part of an assemblage and where the property’s highest/best use significantly increases the property’s valuation post-rezoning,
OR
2 – When the existing building can be razed (https://www.merriam-webster.com/dictionary/raze), the land is subdivided into two or more lots with a greater combined economic value than the current house.
What renovations add the most value?
Let’s assume that the Owner is looking for the greatest “return on the investment” as a percentage of the investment made. For example, a $10,000 investment generating a $20,000 increase in value would result in a 100% return on investment.
($20,000-$10,000=$10,000 -> $10,000/$10,000=100%)
For another example, a $20,000 investment generating a $30,000 increase in value would result in a 50% return on investment.
However, Scott added the answer to this question is, “it depends.”
Generally, it’s prudent to start with understanding your financial limitations. If the limitations seem too restrictive, consult with a mortgage professional and a local REALTOR® to evaluate the current and after-improved values and reassess the funding available for your remodel project.
The next step is to complete a thorough home inspection to evaluate the major systems and their components, including the foundation, structural framing, flooring, roof system, siding, fireplace(s), electrical, plumbing, and HVAC Systems.
Equally critical is the evaluation of improvements to the property, including driveways, drainage and irrigation systems, and landscaping. Finally, it’s prudent to evaluate the existing structure’s orientation and any municipal setback requirements or environmental elements that combine to restrict the “building envelope.”
While renovations are the most significant part of increasing the market value (and the quality of your life if you plan to stay), understanding the underlying repair requirements is essential. Starting a remodel project without a thorough home inspection can result in what many refer to as “putting lipstick on a pig.”
The next step is to consult with a Licensed Design-Build General Contractor to help you create a vision for what would happen with your home over the project timeline for you to be happy with your progress over that time.
Based on your budgetary constraints, your builder may offer you a project timeline that will permit you to prioritize the work completed. Weather and other environmental considerations will be factored in. Still, with either a single major project timeline or several smaller projects completed over a longer timeline, your Design-Build Contractor will help you evaluate the costs, and a REALTOR® can help you evaluate the implications to the value before the start of construction. Suppose financing is involved and a higher evaluation is needed to complete the project. In that case, the Lender will require that you complete both an As-Is and an After-Improved appraisal subject to your builder’s completion of the plans and specifications.
What are the ‘must have’ renovations you should do before selling?
Scott mentioned that market conditions (competition) and property conditions (deferred maintenance and functional obsolescence) would dictate the most important renovations before going to market.
Scott ended with, “Jonathan Brothers and his team have demonstrated to me over the last ten years how committed they are to a quality remodeling experience. After 36 years in the Real Estate and Real Estate finance industries, I have found that unexpected obstacles often arise in construction, so the most important part of being happy with the outcome of your remodeling project is choosing the right contractor. Choose Glasgow DesignBuild, and you’ll be glad about your choice.”
“If we can bring peace to our home, we bring peace to our community, and ultimately, peace to the world.”
~Scott Korbin
COMPASS, the Scott Korbin Team
Cary NC | 919-606-4500
compass.com/agents/scott-korbin/