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Renovating Your Home

 

Many sellers are concerned about what improvements they should make before listing their home for sale.

Understand Why

Home improvements can be made for a number of reasons:

  • it is essential, eg. the furnace has broken down
  • it urgently needs doing, eg. the roof shingles are in visibly poor condition and may soon fail
  • it looks bad, eg. the kitchen is dated, cupboards look bad, counter tops are scratched and chipped
  • it will save money, eg. the toilets use too much water, the air conditioner is old and inefficient
  • it will help sell the house, eg. it needs new paint or landscaping
  • it will help the house sell for more, eg. the flooring should be upgraded from carpet to hardwood

Any property can be sold if it is priced right. No matter how bad things are there is someone out there who will buy it if it is cheap enough. However, if you want to get the best price, then the property must have as wide an appeal as possible. That means placing as few obstacles as possible in the way of potential purchasers. If a buyer perceives that work should be done to make the home comfortable to live in, then that buyer will either

  • avoid the property because they do not want the labour, expense or inconvenience of making improvements, or
  • discount the property in comparison with others to allow for the cost of the work needed
About 80% of buyers cannot see potential - they only see what is in front of their noses. If the seller does the work first, there can be up to five times as many buyers potentially interested in the property. This will mean a quicker sale and a better offer price.

Recovery Rate

Anyone selling a property wants to get the most money in the least time and with the minimum of trouble. Renovating will certainly help with the last two, but does not necessarily mean getting the most money. Spending more on the improvements than you get back from the sale means you are losing money as a result. Sometimes you just have to do that. If your furnace is broken, or the wiring is dangerous, or the roof leaks, then you will almost certainly be better off fixing such things regardless of the cost. What you spend in comparison to what you get back is called the recovery rate. If you spend $10,000 and as a result get $5,000 more in the offer then the recovery rate is 5,000/10,000 or 50%. Below are some typical recovery rates.
Replace wood exterior door with insulated steel102%
Kitchen or bathroom renovation75-100%
New lighting84%
Replace garage door(s)84%
Wooden deck73%
Replace vinyl siding72%
Interior or exterior painting67%
Kitchen cooking island65%
Jacuzzi separate from shower64%
Hardwood flooring62%
Window or door replacement57%
Fireplace50%
Sunroom addition49%
New HVAC system48%
Laminate flooring33%
New carpet20%
If you are able to do the work yourself to a professional looking standard then the returns may be higher. Take care! Poor quality work is likely to result in a much lower recovery rate and may even be detrimental. The value of kitchen and bathroom renovations depends greatly on how much it is needed, on design quality, and on doing enough without overdoing.

What Will it Cost?

Following are some approximations based on basic materials in the Waterloo Region as of the end of 2012. They are provided only as a rough guide to give some notion of what might be involved in monetary terms:
FLOORINGHardwood Floor Refinishing$2-$5 per sq. ft.
Carpet Cleaning$100 per room
Ceramic Tiling$5-$10 per sq. ft.
KITCHENRenovation$7,500
New Counter Laminated$40 per linear ft.
New Counter Marble$75 per linear ft.
SECURITY SYSTEMAlarm System$2,500
Alarm Monitoring$30 per month
DECKPressure Treated$15-$25 per sq. ft.
Custom Designed and Built$50-$75 per sq. ft.
WINDOWSSkylight$750 and up
Thermal Glass (existing frame)$30 per sq. ft.
Costs will change with time and can also vary based on your choice of materials, the complexity of the work, and your choice of contractor. If you are elsewhere in Canada or the United States there may be significant variation based on your location. Don't forget about disposal fees and taxes.

Staging

An excellent investment you can make for selling is to stage your home. This typically involves relatively simple and inexpensive things that dramatically alter buyer perceptions. Things like removing clutter, changing furniture placement, altering the window dressings and decorations. Colour choices, lighting, neutral decor and depersonalised space are very important. A bit of landscaping and some fresh paintwork can also be inexpensive and produce dramatic improvements in the eyes of a buyer.

It is surprisingly difficult to detach yourself sufficiently to properly appreciate what your own home needs. It usually takes a professional eye to assess what are the best things to do and the proper order to address them. The results almost always more than repay the investment provided you get good advice and follow it. If you don't want to pay for professional staging, your Realtor can be an invaluable source of suggestions and opinion based on wide experience.

Your home may have marvellous features that anyone could readily appreciate and value, but if you cannot get a buyer past untidy borders and peeling paint on the front door, then they will never see what it is really worth. Many buyers reject a property based on just a drive past, and it is astonishing but true that most buyers have made up their minds about a property before they have been inside the front door for half a minute.

Seriously

Do your renovations when you move in, and keep your home up to date. Though there may be a less than 100% recovery rate on the work you do, at least you will get to enjoy it yourself instead of doing it solely for the benefit of others. Do not let the resale value of your home fall prey to the costs of deferred maintenance.

 

Site owner: Dot Turner, Sales Representative, Team Realty K W Inc, Brokerage 519-741-1400

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