Is a Renovation Worth the Return on Investment? Consumers think so.
One of your objectives as a homebuyer – and ultimately, a home seller – is to achieve the highest return on investment. A hot property value boils down to a number of factors, such as location, proximity to public transit, the local and greater economy, and the market conditions at the time you list your home. While some of these factors are entirely out of the seller’s control, there are some things you can do to influence your home’s selling price.
According to a social media poll by RE/MAX Canada, 60 per cent of respondents believe a home renovation is worth the return on investment.
Here are some fast facts to mull over. Data from Statistics Canada’s 2016 Census reveals:
- There are 3,126,380 occupied private dwellings in Canada that were built in or prior to 1960. There are another 4,185,510 that were built between 1961 and 1980.
- A total of 920,480 occupied private dwellings in Canada were in need of “major repairs.”
- Another 13,151,600 occupied private dwellings in Canada were in need of “minor repairs.”
Whether your home is in desperate need of a total overhaul, or it’s a bit dinged up and dated, and could use a little love, renovating can increase its resale value. However, not all home renovations are created equal. Be mindful of what homebuyers are looking for when deciding which areas of your home to invest in.
According to the Appraisal Institute of Canada, these are the five home renovations that will yield the best return on investment.
A flooring upgrade is a common improvement that can easily deliver a 50- to 75-per-cent return on investment. While wall-to-wall carpeting might feel cosy in some areas such as bedrooms and basements, it’s generally undesirable for areas like dining rooms, where messes can be hard to clean up. Hardwood or tiles tend to be the most popular choices, but less expensive options such as laminate can also work if you’re looking to quickly improve the appearance of a space at a lower cost. If you don’t intend to change your carpeting, consider having it professionally cleaned before opening your home to potential buyers.
Hardware & Fixtures
Perhaps one of the easiest ways to update the look of your home is to swap out old hardware and fixtures. Things like cabinet handles and faucets are relatively low-cost and can quickly modernize a kitchen or bathroom. Updated light fixtures can also make your home feel more open and welcoming to buyers. The important thing to remember is to choose finishes that are contemporary and neutral, in order to appeal to wider tastes. While you may love your eclectic Art Deco style, this won’t work in your favour when it comes time to sell.
Given the amount of time we spend in the bathroom every day, it’s no surprise that an updated bathroom is often high on homebuyers’ wish lists, delivering a 75- to 100-per-cent return on investment. However, while these high-traffic spaces need to be functional, many homebuyers are also looking for a spa-like environment where they can relax and wash away the day. In general, it’s best to stick to classic, neutral colours and materials that won’t deteriorate with moisture. Also, if it isn’t already obvious, you can ditch the fuzzy toilet cover.
Like bathrooms, a modern kitchen is also high on many homebuyers’ wish lists. Although this is a big-ticket item, the 75- to 100-per-cent return on investment on a newly renovated kitchen is often worth the cost, for those trying to fetch the highest possible price for their home. However, even if a full remodel is not in the budget, there are several ways to give your kitchen a quick update. For example, resurfacing cabinet doors and replacing hardware is a relatively easy project that can greatly improve your kitchen’s appearance. You might also consider changing the countertop, replacing your light fixtures, and having your floor professionally polished.
Adding square footage to your home is probably the best way to increase its overall value. Whether it’s a second-story addition or converting the basement into an income suite, more living space will certainly command a higher price. For bigger projects like these, enlisting a professional renovator can be a big help, since they can help with the design, the plan and the execution. Plus, they often have access to industry discounts, which can stretch your budget a little further.
Of course, regular home maintenance is equally important. Renovating a single room here and there will not disguise other poorly maintained areas in your home. Even if you’re not in a position to make large-scale improvements, keep your home in good overall condition by scrubbing any marks off the walls and ceilings, hiding loose wires or cables, and ensuring the curb appeal is high. Something as simple as a fresh coat of paint can often deliver a 100-per-cent return on investment.
Whether you’re in it for the long haul or plan to sell your home in the foreseeable future, some smart renovations along the way can help ensure you eventually get the highest offer possible when the time comes to sell.
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