Homeowners hear so much about how renovating their homes will increase its value. This is certainly true to a point, but I have seen more times than I would like to say that people lose money after they renovate - especially if they're renovating to sell.
It is common knowledge that kitchens and bathrooms sell, but does that mean you need to tile the bathroom in your 2-bedroom townhouse with Italian marble? Probably not. The only value this adds is to the homeowner. I recently saw a house for sale where the homeowners spent $18,000 on a solid mahogany door from Europe! You can bet they didn't retrieve that cost.
Here are some easy tips to follow when you're renovating:
- Over-expanding. Most people want to keep up with the neighbours, and sometimes surpass them. However, if you live in a community full of war-time bungalows, it's probably best not to build a 3-storey stone mansion on your lot. It will be harder to sell when the time comes, and the value of your home will be negatively affected by those around you.
- Changing a room's function. Homes are generally built to serve a specific purpose, and each room reflects that. If you decide to change a main floor bedroom into a dining room, you're going to lose a bedroom and that decreases the value when the time comes to sell. This only works if you don't change any structure and if you "stage" it properly when you put it on the market.
- Under-budgeting. This often happens with first-time renovators. You think it'll only take a few thousand to redo the kitchen. Think again. Even if you think you've measured correctly and costed the products at your local hardware store, you should usually expect to go 20-30% over budget. Take into account what happens when you take the cabinets off the wall and rip the drywall...you're going to have to replace that piece of drywall. And if you open the walls to do a bit of re-wiring, you never know what you're going to find. It's always a good idea to get a few professionals in to give you estimates. Save up your money instead of putting it on credit, too! It all adds up, and you may need your credit for the extras that eventually pop up.
- Doing unnecessary work. You've lived in your house for 3 or 4 years. Obviously, the things you see every day are the things that will annoy you the most. Keep in mind that you can make small alterations to those annoyances - paint your cabinets or install new hardware, install a bathtub insert instead of re-tiling. You get the idea. Statistically, the smaller the renovation, the better the return. Talk to a REALTOR before you renovate, even if you're not selling that year! We can give you a pretty good idea of what makes sense for your near future.
- Maintenance neglect. As I just mentioned, fixing the things you see every day tends to be the first thing you do. It is SO important not to forget the "bones" of the house. I'm talking about the roof, windows, furnace, air conditioner, etc. They're not glamorous, and you probably won't notice much of an aesthetic difference. But these are the items in your home that will truly pay off in the end.
As with any big decisions you make in your life, take the time to consider all the options. Figure out what renovation would be the best value for you while you stay in your home, and for the future when you sell. Talk to as many professionals and you can, and get lots of information.