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Just the other day I received a phone call from a past client who wanted my opinion on some windows she has bought for her house.  She was thinking about selling in the near future, and wanted to know if the premiere windows she had bought would increase the value of her house.  This got me to thinking that we receive these types of question on a regular basis from home owners, and that there was value in giving my professional opinion online.

I feel like I have to start by saying that this is not a black and white issue - every situation is unique.  Therefore my goal with this blog post is simply to get people thinking about this interesting question and how it relates to their home or real estate.

There are two type of home improvements: those that affect saleability; and those that increase the value of the property.  The fundamental concept in understanding the difference between the two types of improvements, is understanding how the value of residential real estate is determined.  It is determined by the market.  Simply put, the value of your home is the maximum amount that an impartial buyer is willing to pay for it today.  Following this logic, if you buy a home for $250,000 and add $20,000 in improvements, the value does not necessarily become $270,000 (in fact in rarely will).  The value is, what a buyer will pay for it today (after the improvements). 

Improvements that affect saleability are improvements to components of a house that buyers expect.  If the particular component is in good, or great, condition it will increase the saleability of the overall property but not affect price in a major way.  Going back to my original inspiration for this blog post, buyers expect windows.  Generally speaking, the effect to the value of the property buy adding triple-pane, argon filled, UV coasted, diamond studded windows, versus more moderate thermal windows will be negligible.  While the former windows may cost an additional $5,000 to install, they will generally ad very little difference in market value to the home.  This is not to say that there are not valid reasons for installing premiere windows (environmental considerations, comfort of living, etc.), it is simply to say that increasing the value of the property is not one of them.  Two other common examples I encounter regularly are hot water tanks and gardens.  When I'm helping a client establish the value of their home they will often point out that their hot water tank is new.  This is an item that buyers expect, and because property valuation is not an exact science, there is no difference to overall value between a five year old tank and a 5 day old tank.  Similarly, avid gardeners always take great pride in their creations, and are often conflicted by the idea of selling these creations to strangers.  While every buyer in the market can likely appreciate a gardening master piece, these types of gardens to do not have any major affect on property value.  It may however affect the saleability of the property in a positive way.   

Improvements that increase value are a little more difficult to define.  They will often also be components that buyers expect.  I think the best way to start looking at this is to try to establish which components buyers might get emotionally excited about.  Very few of us will have an emotional response to a sweet hot water tank...  But when we walk into a home that is nicely painted with fresh trim, we begin to imagine ourselves living in the house.  This fresh paint and trim has no doubt increased value, beyond the cost of the materials and instillation.  Generally speaking, any inexpensive cosmetic improvements will give a handsome return on investment.  That is not to say that improvements that increase value must be inexpensive.  I work in the Alberni Valley and we are a car town!  As a result, adding a shop to the right property can increase the overall value beyond the cost of building the shop.  Modern kitchens and luxury bathrooms can also have a similar effect.  The key is to give some thought to how your home fits in the market.  If you own a 2 bedroom home, converting the second bedroom in to a massive ensuite will not pay off!  Finally, generally speaking you want to spend as little money as possible when making any improvement - it is a matter of finding the right balance between quality and price.

I hope this information is useful to you, and get's you thinking about ways to increase the value of your home.  And of course, we're always more than happy to come out and give you specific advice in person.  We're only a phone call away.