The question comes down to…are you renovating to enjoy for the next few to many years…or are you renovating to sell in the next few months?
Let’s say you want to put your home up for sale. You're in limbo and not sure where to put your money…or if you should renovate at all.
The dilemma is if you spend too little money …it might end up looking cheap. If you spend too much money, you might see all of that cash go down the drain because not every renovation will have a 100% ROI (Return on Investment). You're the one who has to go through all the inconvenience of living through the renovations, and some lucky new homeowner to turn the doorknob and open the doors to a beautifully finished home.
When renovating to sell, we aren’t talking about staging, which is furnishing and preparing your home for showings and sometimes requires a fresh coat of paint. We are talking about costly and labour intensive renovation jobs such as kitchen and bathroom makeovers.
Here are the top tips to consider:
1) DO NOT OVER RENOVATE – Work with your Realtor and get an understanding of the neighbourhood’s market value. If the houses on the street usually sell for $400,000, you might not want to put $200,000 of renovations into your home to try and achieve over $600,000. I’ve seen both sob and glory stories. Due to market conditions and how well the renovations were done, one happy Seller client of mine spent $15,000 and made a profit of $20, plus recovered the initial $15,000 on an entry level home and having lived there for 3 years.
2) SET ASIDE FOR MISCELLANEOUS EXPENSES – When calculating the cost of new hardwood flooring, stone counter tops…pretty much anything that requires measuring, a certain percentage of extra material must always be factored into the budget. After all, contractors are human and make mistakes. Also keep in mind you might be missing a lot of work to ensure the renovations are being done properly and on schedule.
3) KITCHENS AND BATHROOMS ARE FIRST PRIORITY – Buyers generally are attracted to a dream kitchen and have that wow factor of opening the doors to spa-like bathrooms.
4) FINANCING – Are you using a line of credit against your mortgage to fund the renovations? Do careful calculations so you don’t drain all the equity from your home – we’ve seen this already take place in the U.S., remember? If you plan on renovating to upgrade your home’s energy efficiency (furnace, windows, appliances, etc.) there are government programs out there to help you finance. Visit the CMHC Website to learn more about them.
5) REFURBISH RATHER THAN REPLACE – Sand and stain your existing wood floors and kitchen cabinets rather than laying out brand new jatoba strips, if they’re in good shape. It’s sad to say but it’s all in the appeal and not function to sell. However, a professional job is still in order.
6) PAINT - New paint, especially well-chosen and contemporary shades, will transform a house. Light and airy is more inviting than deep shades. I am still in love with the light grays.
If your renovation goal is for your own personal enjoyment, do whatever your heart desires. But keep in mind that the renovations that you find valuable may not be valuable to the next buyer.
Need a market analysis on your street? Or have any questions for specific renovation ideas? Give me a call or shoot me an e-mail, I’d be delighted to discuss. 416-995-4602 or firstname.lastname@example.org