Additions that add value to your home, and what won’t cut it: Dollar-for-Dollar Additions

When it comes to enhancing your home's value, the key is focusing on dollar-for-dollar additions. Investing in features that directly contribute to square footage or overall aesthetics tends to bring the most bang for your buck.

Best Ways to Add Value to Your Home:

Expanding Living Spaces:

Adding a deck or another floor increases your home's square footage, providing a direct value boost. Expanding living spaces can include adding a full bathroom, adding a living room, a pool, converting existing square footage into a bedroom, or adding an attached garage.  

Landscaping:

Enhancing curb appeal with well-maintained outdoor spaces positively influences perceived property value. Enhancing your curb appeal is shown to increase your property’s value by up to 7%-- hey, every little bit counts! Making sure your home looks great on the outside gives buyers a good first impression, and lets them know that you take good care of your home.

You can add curb appeal by cultivating a lush, green lawn, adding fresh paint and new hardware to your front door, washing exterior windows, adding floral accents, repaving your driveway, replacing your garage door, and power washing your home’s exterior.

Dollar-for-Dollar Value Additions:

Bedrooms and Bathrooms:

Expanding the number of bedrooms or bathrooms, especially through additions or remodels, is a solid investment. Remember: adding a bedroom in the basement doesn’t count. However, adding a 3rd bedroom can add over 6% to your home’s overall value.

Kitchen and Bathroom Remodels: 

Upgrading these high-traffic areas tends to yield a dollar-for-dollar return on investment. A full kitchen remodel can add up to 4.8% to your home’s value– that could be almost $20,000!

Questioning Value Addition:

Do Fireplaces Add Value to a Home?

While aesthetically pleasing, fireplaces might not directly translate into a dollar-for-dollar value increase. That doesn’t mean that they won’t add value to your home: fireplaces can add a 6-12% increase, but remember that it may not be dollar-for-dollar of what you spend on the renovation.

Does Solar Add Value to a Home? 

While environmentally friendly, the value addition from solar installations may not be as straightforward as other renovations. Studies show that buyers may be more interested in buying homes that have solar power, but by adding the addition yourself, you may not be getting a dollar-for-dollar increase on your home’s value. As always, it’s important to consider your overall investment when adding an addition to your home, including solar paneling.

Misconceptions about Value Additions:

Basement Finishing:

Despite popular belief, finishing a basement will not provide a dollar-for-dollar return, and adding bedrooms or bathrooms in the basement doesn't contribute to the overall value. Below-grade living space is worth about half as much as above-grade living space.

New Furnace or Sewer Line: 

Upgrading essential systems like the furnace or sewer line might be necessary, but might not significantly increase the home's market value. On average, you can expect a 30-50% return on investment for replacing these, but these will not be dollar-for-dollar value additions.

Renovations and Refinancing:

Renovating key rooms, such as kitchens and bathrooms, is a trend among homeowners waiting for interest rates to drop. 49% of top agents recommend these value-add renovations.

Adding value to your home not only enhances its market appeal but also proves beneficial when refinancing. Lenders often consider the increased value when determining loan terms.

In conclusion…

To maximize your home's value, focus on additions that offer a dollar-for-dollar return on investment. Strategic renovations not only enhance your living space but also serve as a smart financial move, benefiting both current enjoyment and future resale value.

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Jerry Pounds has over 30+ years of experience in the mortgage industry. If you have questions about your next steps towards home ownership, reach out today.