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How Home Renovations Impact Appraisals

How Home Renovations Impact Appraisals

There are pros and cons when it comes to home renovations. The biggest pro is that the
renovations improve your home and can make it more enjoyable for you. The major con is
that sometimes renovations can cost more than they are worth. When planning for home
renovations, it pays to plan carefully and make smart choices with return on investment in
mind.

Renovations that Impact Appraisal Value

Changing Your Color SchemeMan painting a wall white

Nearly two-thirds of real estate agents recommend repainting the inside of a home before putting it on the market, according to a 2017 survey by Houzz. Additionally, other studies show a fresh coat in the right shade can add thousands to your home’s sale price. Repainting can be one of the cheapest renovation projects, but it needs to be something neutral. Repainting with bright or other non-neutral colors can back-fire.

Incorporate Landscaping

A little lawn care can go a long way. Curb appeal is an important factor to a home appraisal.
Consider simple upkeep for your yard such as:

  • Mowing
  • Weed-eating
  • Gardening
  • Pressure washing the sidewalks

Don’t implement any over-the-top landscaping projects, such as elaborate designs,
fountains, or stone walkways. These projects won’t hold their value.

Implement Energy-Saving Methods

There are various methods you can implement to ensure your home is as energy efficient as
possible. The most important area to focus on is ensuring your home is fully insulated.
Taking this step can cut your heating bills by nearly 10 percent, according to the
Environmental Protection Agency.
Additionally, replacing old windows with energy-efficient ones can save you between $25
and $450 a year in heating and cooling costs. Other minor things include replacing simple
weather-striping at doors

Renovations That Have Little to No Impact on Home Appraisals

Many home renovations do not make financial sense. These are typically done from
emotions and not practicality and functionality. The following are renovations that
contribute the least value to a home:

  • Installing a pool
  • Converting a bedroom into a leisure space such as a playroom or wine cellar
  • Changing hardwood flooring to carpet
  • Closet renovation (adding shelves)
  • Adding bedrooms or bathrooms
  • High-end fixtures and finishes
  • Adding additional electrical outlets

Renovations can greatly impact the appraisal value of the property, either negatively or
positively. Consider what would contribute the most and the least value. It is important to
consider several other factors before implementing renovations.Paint swatches and counter top tabs

 

Factors to Consider with Renovations

Location

A home’s location – what city it is in and even what part of that city – is key to this popular question. For example, adding a central air conditioner to a home in the South may add significant value, while putting one in a home near the Pacific Northwest may not have much impact.

Room

Which room are you considering making renovations to? According to one national survey,
kitchen remodels returned an average of 88 percent of the investment. In other words, a
$10,000 kitchen remodeling project would add approximately $8,800 to the value of the
home. Bathrooms were second, returning 85 percent.

Age

The actual age of a home is not what is most important when appraising a home. An
appraiser is more concerned with the effective age. According to The Appraiser Coach, if you
can take 10-15 years off the appearance of your home, you are doing yourself a huge favor.
The value of a home is determined by the buyer’s perspective.


 

Definitive Valuations is North Alabama’s premiere appraisal firm. Our mission is to provide
superior valuation and consulting services in Huntsville, Alabama, and surrounding areas.
Our staff strives to understand your needs and to provide the best solution for your
situation – whether for financial planning, relocation, tax dispute, legal matters, pre-listing,
or any other purposes. Discover more here.

How Green Home Improvements Can Affect Your Appraisal

How Green Home Improvements Can Affect Your Appraisal

Green home improvements are proving to be highly beneficial to home sellers and buyers.

According to The Appraisal Institute, the nation’s largest professional association of real estate appraisers, three recent studies confirm that green homes may sell for more than non-green properties. The Institute recently encouraged home sellers to consider making green home improvements to their properties, and encouraged buyers to seek homes with those features as well.

There are six elements that must be in place in order for a property officially be considered green:

  1. Site
  2. Water efficiency
  3. Energy efficiency
  4. Indoor air quality
  5. Materials
  6. Operations and maintenance

The green building trend is expected to continue to grow in the future. According to the National Association of Home Builders, the number of single-family builders with more than 90 percent of their projects dedicated to green building is expected to increase from 19 percent in 2017 to 31 percent by 2022.

Download the Appraisal Institute’s “Guide to the Residential Green and Energy Efficient Addendum” here.

The addendum states that, “An energy-efficient property is one that uses resource-effective design, materials, building systems, and site orientation to conserve nonrenewable funds.”

Check out these green home improvements you can easily implement that may improve your home’s value, as well as play your part in protecting the planet.

Solar PanelsSolar panels

Solar energy is the cleanest source of energy. Although expensive initially, you are bound to make your money back long-term with solar panel usage. Implementing solar panels in your home can bring down your energy consumption and supply excess energy. Additionally, government grants, incentives, and tax breaks are available to those who are interested in incorporating solar power in their home.

Permeable Block Caving

One of the latest green home improvements available is permeable block paving. This is a sustainable paving system used for driveways and patios. Permeable paving is similar to standard paving, but has larger gaps between paving blocks, allowing for movement of excess water through the surface, which can be collected and reused. This feature is better for the environment and for your home’s safety.

Insulation

On average, more than 50 percent of a home’s energy consumption goes toward heating and cooling. Ensure the rooms on the top level of your home are all insulated to decrease energy bills Consider speaking to your energy company about an audit if you are unsure of your needs.

LED LightLamp next to bed

When it comes to lighting in your home, consider replacing all bulbs with energy-saving bulbs. LED and CFL bulbs use 80 percent less energy than standard bulbs, last longer, and produce the same strength of light.

Double-Glazed Windows

One of the key green home improvements one can make is replacing standard windows with double-glazing. These airtight windows insulate your home better than any other method and can even reduce noise pollution.

Green and energy efficient home improvements have the potential to pay dividends for buyers and sellers. If you are considering these green home improvements for your home, keep in mind that if you plan to finance your home or sell, the value may or may not be able to be proven in the market at that time, based on what recent sales activity has taken place.


Definitive Valuations is North Alabama’s premiere appraisal firm. Our mission is to provide superior valuation and consulting services in Huntsville, Alabama, and surrounding areas. Our staff strives to understand your needs and to provide the best solution for your situation – whether for financial planning, relocation, tax dispute, legal matters, pre-listing, or any other purposes. Discover more here.