Renovation Pros (and Cons) for Sellers
You’re thinking about selling and decide you need to do some updates because you’ve put off updating for years. You want to maximize the value of your home so you think that updating the kitchen, floors, and paint will add value to your final sales price
Investing big bucks in remodelling isn’t the smart move if you want to see the highest return on your investment (ROI). Buyers shopping for an existing home do not expect it to be in brand-new condition. Often buyers will view your home with renovation ideas of their own, even if you just renovated! So when you’re deciding where to spend money on renovations to increase your home’s value, you need to stop thinking like a homeowner and start thinking like a salesperson looking to make a positive impression on potential buyers.
Okay, so where to start? It’s tough to know which renovations increase home value. Unless your home has problems that pose health and safety risks (such as mold which should be addressed immediately), your remodeling dollars are best spent on projects that improve its appearance. Sellers still thinking like homeowners probably feel like their whole home needs a facelift, so how do you narrow in on which cosmetic fixes will bring the best benefit? Don’t worry, we’re here to help.
How Selling at a Lower Price Point Could Save You Money
It may seem counter-intuitive but sometimes listing at a lower price can actually net you more money. How does this work? Well, consider a situation where you spend $30,000 renovating your kitchen before you list. However, your Realtor advises you that with the new kitchen you can only list for $20,000 more. In this case, if you had listed at the lower price without the renovated kitchen you would have saved $10,000 (30,000-20,000).
Finding data on what projects are projected to add the most value to your home is easy. Professional organizations like the Appraisal Institute of Canada have calculators and reports studying national and regional statistics on which remodeling jobs are most popular and promise the highest ROI. Despite being American, Remodeling Magazine has an annual cost v value analysis which provides a great sample of what you could expect. Almost universally, renovations do not return the same value as they cost.
So how can you determine the few renovations which are most likely to increase your home’s value? Thankfully, top notch real estate agents not only keep tabs on which repairs, remodels and upgrades have the best ROI nationally, they’ll know which ones are most popular and beneficial in your specific neighborhood.
Source: Appraisal Institute of Canada
When talking with your agent it’s always best to be well-informed about potential projects and their projected ROI. So let’s take a look at the data on the nation’s top remodeling projects.
Kitchen or Bathroom Renovations
Kitchens and Bathrooms top the list for the Appraisal Institute of Canada and most agents will tell you that kitchens sell houses. That’s probably why both kitchen upgrades and full renovations top the list of what buyers want. Realtors also believe that kitchen renovations are the most likely to increase your home’s value—but that doesn’t guarantee that you’ll make back every penny you spend. In fact, even if you redo your kitchen, many new buyers don’t even notice as they have their own ideas for a new kitchen and may replace the 6 month old kitchen you did with something brand new.
A deep cleaning, a fresh coat of paint, and installing a new kitchen faucet or cabinetry pulls will go a long way toward helping your kitchen make a favorable impression on buyers. The lowest cost fixes often return the greatest returns. Replacing outdated, broken, or loose fixtures and handles doesn’t have to break the bank. This isn’t just about cosmetics, it is about the usability of your home and letting potential buyers know that the house they may purchase has been well maintained rather than dilapidated.
Before making bigger upgrades—like new countertops—consider both your price point and your competition. If your house is valued in the low or mid-range, installing high-end countertops can actually hurt your home’s value.
On the flip side, if local comparables all have granite countertops and yours doesn’t, you have a choice to make. In order to list at the same price as your neighbor, you’ll have to invest in new countertops—otherwise, you’ll have to settle for selling at a lower price point (which as we mentioned above may actually save you money).
While kitchens are the first place sellers consider spending investment dollars, other projects actually bring in a higher return and improve the look of the whole house.
The condition of your home’s exterior tells buyers a lot about what they’re likely to find inside, so you need to make sure your curb appeal is on point. Whether your home is brick, stucco or siding, if it has been painted, it’ll need to be repainted before you sell. This is because paint is one of the few investments which is almost guaranteed to return its cost in your sale price.
When you’re hiring your painters, make sure you get the details before accepting a bid. Selecting the lowest offer isn’t always the smartest decision if the quality suffers. A poor paint job may actually lower your home’s value.
While you’re outside you can consider some basic landscaping improvements. Seeding your lawn so it looks fresh and full can have a 300% return on investment. No need to install a fountain and expensive plants. Just clean things up so that potential buyers have a great first impression.
Whether you’re thinking of investing money to improve your home’s appearance or increase its square footage, it’s important to remember that there’s no guarantee that you’ll make back the money you spend. But smart sellers who do their research and ask their realtors first before investing a penny have the best chance of earning a top dollar Return On Investment.