Are you taking a critical eye to your house and considering what areas could be improved? Maybe the summer weather is prompting you to invest in a pool, deck, landscaping or new fencing. Or perhaps, your focus is on the inside and you’d like to revamp your kitchen or finish the basement. Whatever the project, everyone naturally expects a renovation or upgrade to add value to the home.
For many people, "adding value" means increasing the home’s worth (in which case, you may have to update your home insurance policy to ensure you have adequate coverage). However, according to the Appraisal Institute of Canada (AIC), there are actually three ways to measure the value of a renovation. There’s the value of:
- Increasing the selling price of your property,
- Enjoying the renovated space while you live in the home, and
- Maintaining the worth of your property.
Increasing the selling price of your property
Many renovations add to the overall value of your property, especially kitchen and bathroom remodels. However, if you’re planning to sell your home in the next year or so, the AIC recommends that you consider improvements that are smaller and less expensive. Specifically, they suggest focusing on a fresh coat of paint, updated lighting and plumbing fixtures, improving the curb appeal and decluttering.
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Enjoying the renovated space while you live in the home
Most homeowners undertake renovations to make their space more livable. In fact, a poll last year suggested that only 12 per cent of those who planned to renovate were doing so to increase the value of their home.
Enjoying the space where you live is important to making your house a home, and while renovating your bathroom or kitchen may increase your home’s value, it also brings enjoyment. Additionally, the AIC lists the following as the top five renovations with the highest enjoyment value:
- Basement finishing
- Sun rooms/Additions
Maintaining the worth of your property
Maintenance projects won’t likely increase the sale value of your home, but rather, maintain the sale value. The AIC lists the following as the top five renovations to maintain your home’s worth:
- Replacing the roof
- Updating the heating and cooling systems
- Replacing windows and doors
- Updating the home’s electrical (panel and wiring)
- Repairing structural defects
No matter the type of renovation you undertake, keep your home insurer in the loop
Before doing any major renovations to your home, make sure you give your home insurance provider a call. This will help ensure you’re properly covered during the renovations and after they’re completed. Depending on the renovations you take on, your home insurance premiums may change. If you are increasing the value of your home, your premiums may also increase (to reflect the added coverage needed). However, if you’re adding, let’s say, a security system, you may see savings. In any case, whether your premiums go up or down after the renovation, compare home insurance quotes to ensure you’re getting the coverage you need at the best available price.