To Renovate or Not….

Clearly renovating is an exciting idea.  It may be that moving is not your best option.  Your home has - for the most part - served you well.  It is in the right neighbourhood, you have friends in the area, but it just does not meet your physical needs.  Renovating may be your best and even least expensive choice.

When considering the cost of selling, the move itself, redecorating the new home to make it just right, (and the list goes on), you might do better staying.  

Imagine having a new home and not having to move.  Just remember that improving your property will not mean that you keep all of the equity you put into your renovation at the time of your next sale.  

If you a planning to stay in your home for five or more years it may be worth spending $10,000 on replacement windows.  Depending on other factors, the average payback is 51%, so when you sell you will gain about $5,000 in the home value.  However if you are staying less than five years, is it really worth it?  

"Homeowners don’t want to spend a lot of money on home renovation, but they do want to maintain value in their house as an investment," says Bob Wade, AACI, President of the Appraisal Institute of Canada. "Kitchen and bathroom renovations are always important in terms of keeping a house modern, but a simple paint job to improve the appearance of a house works well, too."

Below are the results of a recent survey on the value of renovations when it comes time to sell.    These were the top 10 renovation projects in their survey with the average potential payback.  One last warning:  Be aware that major renovations are stressful and some marriages have not survived the process.

Painting and decor, interior 73%  Kitchen renovation 72%    Bathroom renovation 68%   Painting, exterior 65%   Flooring upgrades 62%   Window/door replacement 57%   Main floor family room addition 51%   Fireplace addition 50%   Basement renovation 49%   Furnace/heating system replacement 48%

Top 10 upcoming renovation trends  

Further Thoughts...

The following are the most requested renovations and, coincidentally, those providing the best payback. The top four are:

• Kitchen renovations

• Bathroom renovations - potential purchasers must be able to imagine taking shower in your bathroom! Mould in the grout is easy to fix and paint on the ceiling do wonders.  The cost is low and the payback enormous,  

• Landscaping & exterior painting adds great curb appeal. 

• Interior painting and decorating in neutral colours, upgraded mouldings, simple window treatments, all are relatively inexpensive and add much to the value.

In most cases, the payback potential of all the above could average 100% and better. In the case of kitchens, payback as high as 200%, according to the Appraisal Institute of Canada survey .

Other renovations offering good payback potential - generally in the range of 50% - are main-floor additions (family/great room), new windows and doors, new heating systems and central air. The payback on basement renovation and finishing may vary widely. Its hard to make a silk purse out of a sow's ear. Walkout basements and basements with lots of natural light and good access from the main floor would offer the best payback. Attic spaces in smaller homes could provide low-cost additional living space and usually yield a good return on investment.

The following offer little or no payback and can even decrease in the value of the home.

• Pools, while wonderful to some, are never great selling features. If you want one, plan to not move for a long time to get the most enjoyment out of it as possible.  Generally they add very little to the value.  If the pool is in poor shape it most certainly will detract.

• A poor do-it-yourself renovation, either poor in quality or design, will decrease value.

• Going overboard in a small house in a low-end neighbourhood or a doing a major basement renovation in a large house will give very little return when compared to the money spent.