Renovations That Pay...

and how to avoid the ones that don't

Increasing numbers of clients are undertaking renovation as a way of enhancing their substantial home investments and making them more saleable in future. Studies show that home renovation is now a $21.6- billion industry in Canada, and is larger than new housing activity by almost 20 per cent. Most of these homeowners renovate to improve their living conditions, but a large number renovate in order to improve the value of their homes.

So many times after our clients move into their newly purchased homes, some renovations are made - even to brand new homes!  If you are considering renovating, you may want to choose home improvements that not only pay off in recovery of the money you spend, but also help you get a better price if and when you sell it. 

Renovations that pay:

1) Kitchen:  New cabinets, flooring, countertops & appliances can be costly but buyers look for updated kitchens.  Typically you will regain a large percentage of you kitchen renovation expenses on resale.  Even minor facelifts such as refacing cabinets, new countertops or new hardware will pay off in a faster sale at a better price.  Best bets are light neutral colors, plenty of cabinet and counter space and new lighting fixtures. 

2) Bathroom:  Upgrading an existing bathroom with new light fixtures, toilet seats, medicine cabinets and bathroom hardware are likely to pay off in both value and sale ability.

3) Carpets:  Installing new carpets and lino or tile will take years off of an older home, breathing new life into it.  Best bets are warm neutral tones that will suit anyone's furniture.

4) Energy Savers:  If your windows are drafty or unsightly consider replacing them with new double pane vinyl windows. 

Renovation that may not pay...

1) Over-improvements:  Add the costs of you proposed remodeling projects to the current market value. 

If the total would now be more than 20% over the average homes in your area, you probably won't recover your expenses when you sell. 

2) High Cost / Low Value Improvements:  It's great to have a swimming pool to take a cool dip on a hot summer day or a hot tub to relax in after a long day at work.  But, not every buyer wants such luxuries, and some are hesitant to buy a home with high-maintenance cost features. You may decide that the cost is worth the enjoyment, however.

3) Extravagant Interior Design:  When doing any renovation project if you go for gold fixtures, baroque chandeliers or unique decorating fixtures, the average buyer will not pay the extra $$ or will bypass unique designs or decorating

Renovation pay-back formula:

                                                Canada                  United States

Kitchen Upgrades                       75-100%                    98-108%

Bathrooms                                 75-100%                    73-81%

Built in Media Center                     62%

Interior & Exterior painting           50-100%

New furnace or heating system    50-80%

Roof shingle replacement            50-80%

Extra Fireplace                           50-75%                        50%

Flooring                                     50-75%                 

Finished basement                     50-75%

Adding a garage                         50-75%

Deck                                         50-75%

New windows / Doors                 50-75%                          57%

Addition of family room               51%                             

Landscaping                              45%

Addition of separate living unit     42%

Energy efficient features             39%

Home office conversion               35%                            65-77%

Central air conditioning               25-75%

Fencing                                     25-50%

Upgrade Landscaping                 25-50%                          31%

Pool                                       10-40%                             31%

Vinyl siding                                                                   55-84%

Hardwire security system                                                 58%

Glassed in porch                                                             54%

Screened porch                                                               48%

Gazebo                                                                          48%

Hot tub                                                                           41%

Tennis Court                                                                   34%

Sauna                                                                              7%

Upcoming trends for renovation projects

Main floor laundry room                          Ground floor home office

Hardwood flooring upgrade in kitchen       Whirlpool bath separate from showerBuilt-in-kitchen appliances                              Addition of kitchen cooking island

Non-neutral interior paint colours              "Smart" house wiring

Home theatre room                                 Skylights

Source:   Appraisal Institute of Canada

Best wishes,

Larry & Marlene Siebert

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