Tuesday, 5 March 2013

To Renovate, or Not to Renovate?

Renovations can increase the value of your home, but be careful not go overboard.

It used to be that we were the ones who would offer suggestions as to how to improve a home’s look and therefore value prior to selling.  But with more and more renovation shows on TV now, more often than not we are asked to come and see the finished product! It always amazes us how folks have changed the look and feel of their homes since purchasing.

So should you renovate your home into something that suits you- or make changes that will suit the next buyer?  Before you jump in, sit and make a list of what’s important to you.  Do you know for sure that you will sell your home or is there the possibility that once it is all done, you will love it so much, you will want to stay?  If sprucing up is done with selling in mind, modern but neutral should be the guiding principle.

On the one hand, if you are thinking of moving because you need more space- but you love the location you are in, it might be a better idea to do an addition, move some walls to open up the space or finish the basement.  Remember- a home‘s look and feel can change but th
e location is permanent. An addition can be an exhausting process, costly and time consuming right from the start while
you get drawings, permits, approvals and consult with different contractors. Additions can take put a strain on daily family life as some parts of the home are unusable for a while, others are in constant disarray and dust is everywhere!  Even remodeling a kitchen or bathroom can take weeks or months to complete.  Finishing a basement can be less of a headache because the work is away from the main floor and life can continue without huge interruptions.

And then there is the cost.  As David Chilton, author of The Wealthy Barber Returns, says, the four most expensive words in housing renovation are: “ while we’re at it”!  Remember that one renovation inevitably leads to another.  Every wall opened creates another problem to be fixed. And because we are human, we tend to change our minds during the process.  Of course we all know that the more expensive one always just looks better and that our tastes almost always exceed our budget.  Don’t expect to have a contractor do his work for the same cost you would pay to do it yourself. The contractor also has trades to pay, and though they can get materials at a better cost than you can, their costs are still high. They like you, and every other person who works at a job- works to get paid a decent wage.  On the other hand, unless you are a skilled tradesman and have unlimited time to do the job- it is probably better to hire out than attempt a do it yourself “that’s good enough” project.  

It used to be that the majority of Buyers wanted to find a home that they could put their imprint on, a diamond in the rough that had potential!  But with the barrage of the home renovation and staging magazines and TV shows, we now find that most Buyers want to find a home already staged, a place that looks like it should be featured in a magazine.  And that’s where a smaller scale renovation comes in.  Paint, cabinet replacement/ resurfacing, countertops, backsplashes, hardware, lighting, flooring, and even new appliances can make a world of difference.

It’s a very common misconception that if you spend $20,000 in renovations, your house is now worth $20,000 more.  Almost always this is not the case.  $20,000 of renovations may only increase the value of your home by $10,000, depending on what renovations were done.  We have also seen that occasionally, that same amount of dollar value put in to a home can actually double, depending on the home’s location, features and the market itself.

So many times we have had Buyers who say that they will live in a particular home “forever”, and in 2 years time, life has changed and there is now a need to sell.  We caution homeowners that if they think they may be selling within just a couple of years, to be conscious of the cost of any given renovation.   A $20,000 kitchen makeover might be just as effective in procuring a sale as a $60,000 makeover.   And the extra amount in your pocket of course is a good thing.  Also remember that if you renovate now and sell in 7 years, the renovations are no longer “new”.  The trend we see these days in terms of real estate Buyers is that they want things clean, uncluttered and in “move-in” condition.   

So keep us in mind when you are contemplating renovating.  We’re always happy to offer an opinion on what to change, what colors & trends are current, whether a renovation is warranted and even whether it’s advantageous to sell or stay right where you are!

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