Major Home Renovations & Home Appraisals: What You Should Know

Are you planning house renovations and want to know the best home improvement investments? Or maybe you are planning to sell your house and are wondering about renovations that increase home value the most.

Whether you are planning to sell in the near future or not, most people want to be reassured that any major renovations they invest in will be reflected in an increased home valuation.

While any renovations that improve the function or look of your home are a good idea, some have a better return on investment value than others. If you are looking to sell quickly or have a limited budget, it is worth researching the renovations that increase home value the most.

As Vancouver Island’s home evaluation expert, D. Fritz Appraisals Inc. knows which renovations can add market value – and which will make your home more valuable to you but won’t necessarily increase the selling price.

Read on for our top 8 picks for renovations that increase home value in BC.

How is Home Value Measured?

When considering home value and how to increase it, are we simply talking about market sale price? According to the Canadian Appraisal Institute, value can be recognized in three ways:

1 – The Value of an Increased Sales Price – Renovations are done primarily to maximize value and profit from a sale.

2 – The Value of Getting to Enjoy or Benefit From a Renovated Space – Renovations are done primarily to improve your lifestyle in the home for the time you live there, which may also add market value in the future.

3 – The Value of Maintaining Your Property – Renovations that keep your home in a condition where it retains its market value.

If we focus on increasing the market sale price, the value of renovations is usually measured by the possible Return on Investment (ROI).

For example, if you spend $20,000 on a renovation and the valuation of your home goes up by $20,000, that is a 100% ROI. On a home valued at $500,000, that would be a 4% increase in home value.

Renovation ROI will be influenced by the current value of your home, your local housing market, how soon you sell after renovations and how much you spend.

A good home appraiser can help you decide what home renovations will provide the best value return on investment in your area.

Our 8 Top Picks for Renovations That Increase Home Value

When deciding what renovations to complete, consider the following 8 home renovations which have historically proven to bring the biggest return on investment:

Kitchen Remodel: 75% – 100% ROI

At the heart of the modern home, a kitchen can make or break a sale. A functional and neutral refresh will increase value and saleability. Consider new appliances, backsplash, cabinetry or hardware.

*Unless you plan to live with it for a while, don’t go too high-end, as the return will not be worth it.

Bathroom Refresh: 75% – 80% ROI

Buyers appreciate a fresh, clean and modern bathroom. Consider adding double sinks, upgrading the shower unit and refreshing the paint for the best return on investment.

Interior and Exterior Painting: 60% – 75% ROI

Fresh paint gives a high return and increases buyer appeal. Keep colours neutral inside and in keeping with your neighbourhood outside.

Structural Upgrades: 75% ROI

Buyers will be put off homes that are badly maintained. If your roof, windows or heating system needs upgrading, prioritize those over cosmetic changes.

Flooring: 100%+ ROI

Remove wall-to-wall carpeting and replace worn flooring for maximum ROI. No need to install expensive hardwood. Buyers are looking for flooring that is clean and easy to maintain.

Energy Efficient Additions: 50% – 75% ROI

Such as upgrading your heating and cooling or adding solar panels. Anything that reduces energy use and costs will attract buyers and increase value. For the best ROI, enjoy living with these upgrades for a few years before you sell to reap the benefit of lower bills.

Create More Living Space: 75% – 100% ROI

Buyers are looking for the most usable square footage for their money. Add extra space with an addition or basement renovation, but keep the finish neutral so buyers can choose how to use it. If you remain in the home, a basement rental suite can help you recoup the costs of the reno.

Curb Appeal: 80% – 90% ROI

First impressions count. Add value by painting or replacing your garage and front doors. Clean siding and replace any damaged sections.

TIP: Keep receipts and details of any renovation work done to prove the value and quality of the changes.

If your time and budget don’t allow for larger scale renovations, but you want to do something to increase both market value and saleability, this list of 11 easy renovations to increase the value of your home from HGTV star Mike Holmes is a good starting point.

How Your Appraiser Can Help You Choose the Best Renovations to Increase Value

Property appraisers understand the local housing market. They know what investments are giving good returns, can help you understand what your home may be missing compared to local comparative properties, and can give you an idea of what the value may be once improvements are made.

Appraisers can also provide post-renovation evaluations – so you can see what value you’ve added to your home from the work you’ve completed.

In addition, if you’re looking to get financial support for major renovations through a bank loan or mortgage extension, appraisers can provide the valuation your financial lender may require.

Call D. Fritz for Your Appraisal Needs

At D. Fritz, we pride ourselves on being on top of the local housing market, including understanding what buyers are looking for and what renovations will add value and attract buyers’ interest.

Our team can help with valuations for home renovations, mortgage financing and new construction, as well as for the division of assets and estate requirements.

We offer professional real estate appraisals throughout southern and central Vancouver Island from Nanaimo to Victoria and the Gulf Islands.

How to Use Home Equity to Buy Another House

Are you dreaming of owning a second home? Using equity to buy a second home can make your dream a reality.

Taking equity out of your home to buy another house can be a financially advantageous option, as it allows homeowners to tap into the built-up value of their primary residence without worrying about saving up for a second mortgage.

Home equity is like having money in the bank, but it’s tied up in your real estate. This article will discuss the definition of home equity and taking equity out of your home to buy another house in Canada.

What Is Home Equity?

Home equity is a homeowner’s financial stake in their property. It represents the difference between what they owe on their home and its current market value. Homeowners can access this equity through refinancing, taking out a second mortgage or HELOC.

Using equity to buy a second home can be attractive for those looking for additional real estate investments. Using existing funds from your first property, you can avoid taking out a large loan with high interest and a lengthy term. Plus, any future profits generated from rental income could simultaneously offset costs associated with owning two properties.

How To Calculate Home Equity

Calculating home equity is essential in using it to buy a second home. Home equity is the difference between how much your house is worth and what you still owe on your mortgage loan. To calculate your current home equity, subtract the amount of money remaining on your mortgage from the estimated value of your property.

Refinancing Vs Home Equity Loan Vs Line Of Credit

There are several options available for using equity to buy a second home. However, each option offers different advantages and disadvantages that need to be weighed when considering the best option for your particular situation.

Refinancing to Buy a Second Home

Refinancing involves replacing your existing mortgage with another, larger mortgage. This can provide access to lower interest rates and extended repayment periods, potentially saving money on mortgage payments. However, refinancing will also incur additional closing costs, such as appraisal fees and legal expenses, which the borrower should consider before making a decision.

Using a Home Equity Loan to Buy Another House

A home equity loan is similar to any other loan where you borrow a set amount from your lender at a fixed interest rate against the value of your property. Often referred to as second mortgages, home equity loans typically have shorter terms than traditional ones and require regular monthly payments until the balance has been repaid entirely. The downside is that because this type of loan uses your home as collateral, you risk losing your house if you default on repayments, so careful budgeting is essential.

Using a HELOC (Home Equity Line of Credit) to Purchase a Second House

A line of credit works differently than refinancing or getting a home equity loan. Borrowers get flexible access to their funds through the ability to draw funds up to the agreed-upon limit without having to reapply every time they need more money. This makes it ideal for ongoing projects but may come with higher interest rates than other borrowing forms of borrowing so make sure you understand all the details before signing any contracts.

*Regardless of what method you choose, always check if there are government subsidies available which could help reduce costs associated with buying your second home – these incentives vary depending on location, so do some research first!

Tips For Making The Most Of Home Equity Investment

Making the most of home equity investment requires careful consideration of various factors, including understanding your home equity, evaluating financial goals, and seeking expert advice to make informed decisions. Here are some tips to guide you in maximizing your home equity investment:

First, know how much equity you have in your home
Evaluate your financial situation to determine if using equity to buy a second home is the right choice for you
Compare different lenders and their offers to get the best interest rate and terms
Consider the length of your loan – longer loan terms can lower monthly payments but also increase the amount of interest you pay over time
Be mindful of borrowing more than your current mortgage balance, as this can increase the total amount of interest you pay over time
Taking out a home equity loan or line of credit can impact your credit score, so it’s essential to understand the potential consequences
The interest you pay on a home equity loan may be tax deductible, but consult a tax professional to understand the implications
Explore ways that you might reduce expenses like insurance premiums or maintenance costs so that more of your income is going towards increasing ownership stakes in both homes
Stay on top of regular payments to ensure that you keep building positive equity in both investments over time

D. Fritz Appraisals Can Help You With Your Next Home

Using equity to buy a second home in Canada can be an advantageous financial move for many homeowners. Considering all the pros and cons before investing in this (or any) loan or mortgage product is essential.

Calculating your home equity is the first step. Then you’ll need to decide between refinancing, taking out a home equity loan, or getting a line of credit. Finally, make sure you understand what you’re signing up for and how it will affect your bottom line before making any commitments.

D Fritz Appraisals has the skills and expertise to appraise your property at fair market value to get considered for a second home. We have provided reliable real estate lending, sales, and appraisals for four decades in Victoria, BC.

We provide fast and accurate mortgage financing appraisals to homeowners, lenders, mortgage brokers, and real estate agents who need knowledgeable assessments of the local market. So, if you’re eager to move and buy your second home, give us a call.

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Renovations That Increase Home Value in BC: Our Top 8 Picks