Renovating With Resolve
Oftentimes, home owners who are thinking of selling,
undertake enormous renovation projects in the hopes of maximizing a return on
their renovation investment. Unfortunately
not all renovation dollars are created equally and far too often, homeowners
lose sight of the objective and spend their money on projects that will not
reap dividends when it comes to listing and selling their homes.
According to an Ipsos-Reid survey, Canadians are investing in home improvements like their lives depended on it. It is projected that two-thirds of all Canadian homeowners intend to undertake renovations within the next twelve months; a statistic that should have the likes of Home Depot and Rona rubbing their hands with glee as they race to the cash registers to count their money. While most have allocated reasonable sums to their renovation budgets, others intend to throw caution to the wind; sparing no expense on luxurious materials, home entertainment systems, and opulently decking out their pads like the Taj Mahal. Believe it or not, a $60,000 kitchen renovation isn’t unheard of in some circles! There is a question that begs to be asked however; just how much of these investments will be recovered at sale time? For the answer to this question and others, read on……
While most renovation projects are undertaken with the intent to satisfy a homeowner’s needs, or to improve their quality of life, others intend to pamper themselves with a splash of luxury. Regardless of the motivation, one should always try to assess the value-add component just in case you should decide to sell down the road.
The Appraisal Institute of Canada undertakes a survey each year, polling its members to compile a list of renovations that yield the highest return. Not surprisingly, kitchen and bathroom renovations are always at the top of the list year over year; yielding between 75 and 100 percent return on investment come sale time. You may be interested to know that nearer the bottom of the list are pools.
Before you run off to the nearest home improvement centre, credit card in hand, you should also be aware that not all your neighbours may share your exemplary tastes in home improvements. For example, your $25,000 kitchen renovation may or may not, reap the same rewards as the $25,000 kitchen renovation your neighbour down the street undertook. A project undertaken in poor taste can actually work against you, adversely affecting the value of your home. When renovating, you must plan ahead and take the needs of the majority of potential buyers into consideration; ensuring that modifications are in keeping with the times and that they will appeal to the maximum number of people. Further, a home that is well presented on the inside will not only sell slightly higher than others, but oftentimes it will sell faster as well. Today, buyers are captivated by the allure of luxury. Your renovations should be in line with current trends, but care must be taken not to fall for passing fads. Does anyone remember shag carpeting and beaded curtains?
Generally speaking, the rule of thumb is to avoid projects that will set your home too far apart from other properties in your neighbourhood. Remember that your neighbour’s home will, and is, used as a benchmark for establishing the value of yours. To that end, the Appraisal Institute of Canada posts the following warning on their website; “If the value of your house exceeds the average market value in your neighbourhood, your renovations will not yield much return. But if your house value is below the average, you can recover a larger part of the renovation costs.” Keep your project in line with the overall value of your home and the esthetics of your neighbourhood; a $25,000 bathroom does not belong in a $100,000 house.
For interests sake, listed below are the seven hottest home improvements trends of the day;
- Home theatres
- Hardwood floors in kitchens
- Main floor laundry rooms
- Whirlpool baths
- Built-in kitchen appliances
- Main floor offices
- Kitchen islands
Of even greater interest to all of you eager home renovators out there, will be the following list of recoverable renovation dollars;
- Kitchen upgrade: 75% to 100%
- Bathroom upgrade: 75% to 100%
- Interior painting: 50% to 100%
- Roof replacement: 50% to 80%
- Replacement of furnace or heating system: 50% to 80%
- Expansion (addition of family room): 50% to 75%
- Doors and windows: 50% to 75%
- Deck: 50% to 75%
- Installation of hardwood floor: 50% to 75%
- Construction of a garage: 50% to 75%
- Fireplace (wood or gas) 50% to 75%
- Central air conditioning: 50% to 75%
- Finished basement: 50% to 75%
- Wood fence: 25% to 50%
- Interlocking paving stones on driveway: 25% to 50%
- Landscaping: 25% to 50%
- Asphalt driveway: 20% to 50%
- Pool: 10% to 40%
- Skylights: 0% to 25%
My
dear friends, when in doubt about what renovations to undertake, or how much to
spend on them, my best advice is to always seek out the advice of a trusted
real estate professional. No one
understand the market like your realtor, and no one knows what home
improvements are like shiny little things to the flock of magpie-like buyers we
want to attract to your home like your realtor either.
Now grab your hammers, your credit cards, and be off with thee to the nearest home improvement centre!
Michael