When to Spend and When to Save?
Many people ask where they should spend money on their home in order to sell it for more money later. I say, why wait until it’s time to sell? A project that makes your home more beautiful, comfortable or energy-efficient also makes it more enjoyable to live in. Homes are not just an investment, they’re where we live, so not everything has to be decided on a future-cost-effectiveness scale. However, if you’re planning on selling a few years down the road, here’s what I can suggest. If the goal of your project is to increase the value of your home for resale, your project needs to reflect the neighborhood. Overimproving your home will not automatically bring your selling price up other homes in that category. For example, you can certainly spend six figures on a full luxury kitchen renovation, but unless you live in a neighborhood of million-dollar houses, you’ll want to scale things down to something more appropriate to the neighbourhood, if your goal is to get that money back in resale value. Your money would be better spend on a minor remodel- refacing kitchen cabinets, countertops and flooring- items that bring your home up to modern tastes, but don’t bankrupt you in the process. The same model applies when it comes time to redoing the bathrooms. A cost-effective facelift would include things such as replacing faucets, adding new flooring, new light fixtures, new wallpaper or tile, new towel bar and toilet paper holder, new vanities and countertops, mirrors, medicine chest and maybe pulling the toilet and doing a new tub surround in extremely dated bathrooms.
The key to home renovations and resale is to give yourself a good competitive advantage. If your neighborhood is mostly three-bedroom, two-bath houses and your house has only one bathroom, you’re at a serious disadvantage on the resale market. Adding on a bathroom would make a big difference. The same goes for finishing a basement- critical on a smaller townhome where every bit of space must be utilized for a family; not as important on a sprawling 2 storey with a main floor family room- unless every other house in your neighbourhood has a finished basement. Some renovations won’t necessarily get you much more money, but they need to be done in order to sell your home. This would include addressing structural defects, removing vermiculite or asbestos insulation, replacing a worn out roof or windows, or updating a furnace. Putting on a $50000 lifetime warranty roof will not increase the value of your home by much more than a standard reshingling, so unless you are planning to stay in the home long term, I’d take a pass on that particular roofing solution.
So, when it comes time to open your wallet to pay for home improvements, before you shell out the big bucks, stop and think about the Jones’ next door, and if completing that level of renovation would make sense in your neighbourhood.