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Kitchens are the clear winners when it comes to home renovations that have the highest potential to boost a property's value, according to a new Royal LePage survey.
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A granite countertop or a walk-in shower: which will boost your home value the most?Kitchen and bathroom remodels are by far the most popular types of home renovations. But according to a new survey by real estate giant Royal LePage, they are not equal when it comes to the potential for enticing future buyers to pony up more cash.While a master bath with a double sink, his and her cabinets and custom vanities may be your idea of personal sanctuary, a dream kitchen will likely add significantly more to your property value, according to the poll.
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Nearly 55 per cent of more than 750 real estate experts quizzed by Royal LePage said an upgraded kitchen has the potential to increase a home selling price by more than 12.5 per cent. By comparison, half of those surveyed said a new bathroom might add between 2.5 per cent and 12.5 per cent, on par with adding a finished basement.Energy-efficient upgrades such as new windows, an eco-friendly heating system and basement apartments ranked fourth, with the potential to add 10 per cent to a property’s value.READ MORE: Why starting your home reno in November could save you lots of money
Landscaping and interior painting will likely add less than 7.5 per cent, while a fresh coat of paint on the exterior walls will likely yield less than a 5 per cent boost.And if you’re thinking of adding a deck or a pool, don’t do it unless it’s for your own benefit. Prospective buyers aren’t likely to be enticed, according to the survey, which indicated both types of renovations usually yield less than a 2.5 per cent increase on the selling price.“To financially benefit from a home improvement project, you need to keep potential homebuyers in mind,” said Tom Storey, a real estate agent at Royal LePage Signature Realty. “While updating a kitchen should increase your sale price, a pool can actually deter families with young children or those who are looking for less maintenance.”WATCH: Interior designer Candace Wolfe on dos and don’ts of home renovations
But what’s really worth doing?
Knowing what’s likely to give the biggest lift to your selling price is good. But knowing which renovation project delivers the most bang for your buck is better.A kitchen that adds another $50,000 in value to a $600,000 house sounds great — unless you spent $80,000 on it.When you look at the home renovations that are most likely to pay for themselves, kitchens and bathrooms are tied, according to a widely-quoted assessment by the Appraisal Institute of Canada (AIC). Both will likely boost your home value by between 75 per cent and 100 per cent of what you spent.READ MORE: Home renovations: The 4 big risks of borrowing against your house to pay for itThe rule of thumb is that “a good investment in a renovation should increase the value of your home by at least 50 per cent of what you spent,” according to the personal finance website of the Ontario Securities Commission.Small touch-ups like painting and new rugs, eco upgrades and new fixtures and basement renovations will all do that, according to the AIC.Fancy landscaping jobs and swimming pools, on the other hand, are on the do-not-do list, at least if you’re counting on recouping a large chunk of your money.WATCH:What you should know before signing a contract for home renovations
Home renovations aren’t investments
To know that you can make your renovation money back is comforting. But that doesn’t mean home improvements are money makers.Sure, it ‘s easier to justify shelling out $1,000 on a kitchen backsplash installation if you can tell yourself it’s an “investment.”But according to the AIC numbers, home renovations make for pretty poor investments. If you’re lucky, you’ll make your money back, which is an investment return of exactly zero.That’s why many real estate agents advise against embarking on major upgrades right before selling.READ MORE: Why homebuyers should stay away from this popular financing strategyA state of the art kitchen may bedazzle new buyers, but simply spraying your cabinets and buying new handles will likely give you considerably more bang for your buck.And when you’re budgeting for a renovation, don’t forget to include taxes and a top-up of 15 to 20 per cent to cover the (nearly inevitable) cost overruns.