“How much will my property value increase if I renovate? Should I put in a new kitchen before listing my house for sale? Or maybe a new bathroom? Should I paint my house? What do Toronto home Buyers want?”
We get these questions all the time and here’s the reality – there is no one-size-fits-all answer. In our last blog, How Renovations Affect Your Home’s Value, we looked specifically at what kind of ROI you can expect on everything from a kitchen renovation to a new furnace to a new pool. Today we’ll share a few more tips to help you decide if you should renovate your Toronto house or condo:
1. Don’t unknowingly over-renovate your house. If you put $200,000 of renovations into your $500,000 house and the houses on your street sell for $550,000, you’ll have a hard time selling your house for the price you think it’s worth. Every house on every street in every neighbourhood has a maximum price, no matter what’s happening inside. Of course if you plan on staying in your house for 25 years, then it doesn’t really matter – but go in with your eyes open nonetheless.
2. If your primary renovation goal is your own personal enjoyment, go for it. But recognize that the renovations that are valuable to you may not be valuable to the next buyer. We see this all the time – someone spent $20,000 wiring their house for sound 4 years ago and expects someone else to put the same value on that wiring today. Not gonna happen. In fact they may plan on ripping out that wiring and the fact that it’s there is actually a negative to them. But if that $5,000 hot tub will give you $5,000 of enjoyment (fyi, ours does), then stop worrying about your house as investment and remember this is a home.
3. If your primary renovation goals are to increase the value of your house, then educate yourself on what matters to people. Make sure to check out our Renovation ROI list, or better yet, bring in an expert (read: realtor) to give you a sense of what’s worth doing in your house.
4. How are you financing your renovations? Will you be putting them on a credit card with an 18% interest rate? If so, that $15K bathroom just got a whole lot more expensive. Will you be taking out a line of credit on your mortgage? Be careful about draining the equity in your house – just look south of the border to remember why that’s a bad idea. There are various government programs out there to help you finance renovations (especially those that increase the energy efficiency of your house) – you can find out more about them on the CMHC Website.
5. Sexy vs. unsexy money. While new hardwood floors might be what you want, it might make more sense to spend unsexy money on boring stuff like electrical and plumbing before you deal with the cosmetic renovations you’d like to make. Make sure to read our blog: Toronto Houses: Deciding What to Fix First.
6. If your goal is to sell, call in an experienced REALTOR before you call the contractor. An agent who knows Toronto houses can give you a better idea about how your home will be seen by potential buyers and how any renovations, repairs and staging will affect the asking price. It doesn’t make sense to put in $20,000 in renovations to increase the sale price by $10,000 (let alone having to deal with all the renovation headaches).
Want to chat more about whether or not you should renovate? Give us a call or send us an e-mail. We’d be happy to discuss your particular circumstances.