Best Home Renovations-Money Wasted or Money Invested?
Buying a new home also means looking for the best new home renovations or upgrades that fit your lifestyle. When selling a home different renovations can either mean money in your pocket or potentially money out the window.
After I’ve shown clients the first few homes in their new home search, we often discuss my “Real Estate Baseball” rule of thumb. What do I mean by this? Three strikes and you are OUT! As soon as potential buyers can tally up three perceived “defects” in your home, they aren’t interested any more (it should be noted that this is by no means scientific).
You can’t make a first impression on potential buyers again, so, you need to make a great one at the beginning!
I often talk with clients about renovations and Do It Yourself (DIY) projects so they can make the right informed decisions. Sometimes renovations can add to a home sale, but other times they just become another stressful event associated with selling your home and wont generate the return that you are looking for.
Here is a list of potential renovations that I often discuss and recommend with clients.
1) Painting
When my clients walk into a freshly painted home, they immediately notice how fresh and clean it looks. Picking neutral tones and doing a neat and tidy job is key. This is an inexpensive way to freshen up a home and it can dramatically improve the look and feel of a space at a low-cost. It is clean, crisp and welcoming. Potential buyers feel at ease straight away and this is how you want people to feel as they consider your home.
2) Kitchen
At least 95% of my clients tell me that the Kitchen is the “heart of the home”. That is why it is such an important room when selling a house. Potential buyers are picturing Thanksgiving and Christmas dinners being prepared with family or hosting dinner parties with friends. You need to make the kitchen as desirable as possible.
Kitchens should be bright and spacious with a smart layout. Replacing old appliances with energy-efficient new appliances adds a lot of appeal. If you are undertaking a renovation and you don’t already have one, make sure to add a dishwasher if possible.
3) Bathroom
It can be very costly and frustrating to change the layout of a bathroom but if you pay close attention to the finishes, it can be a great investment. In my experience a beautiful mirror and hardware upgrade can make the world of difference.
4) Flooring
New flooring or rejuvenated old wood floors are incredibly popular. Upgrading to hardwood in the living areas and ceramic in kitchen and bathrooms can have a dramatic effect on a home’s value.
My clients often comment on how a home could take on a whole new look with improved flooring. The biggest complaint I hear currently is in regards to old carpet covering hardwood floors. Expose the floors! Sometimes they won’t even need re-finishing.
I would consider putting nice carpet in the bedrooms. While almost everyone likes hardwood and ceramic, they don’t necessarily like getting out of bed onto a cold floor in the winter!
5) Light Fixtures
Let there be light!
Not only do upgraded light fixtures look good, they also help to brighten up your home. Potential buyers do not want to be straining their eyes to look at your home. Make sure it is bright, warm and inviting!
6) Curb Appeal
This is the very first impression people will have of your home. Make sure your front lawn is tidy and gardening is minimal. Don’t feel like you have to go overboard but take an afternoon and plant some shrubs and flowers.
This is my take on potential renovation projects you may wish to under take. Below is a grid, provided by the Appraisal Institute of Canada, outlining other home renovations with return on investment (ROI) as well as the ones I have discussed. It is important to remember that even if you cannot afford to do any home renovations, that doesn’t mean your house won’t sell.
You should also make sure and not price your home out of the market. This can happen when people complete too many expensive renovations only to find that to recoup the costs you would have to price your home higher than any home in the neighbourhood or surrounding area. Speak to an agent in your area; they will be able to give you accurate market information to ensure this doesn’t happen.
Ultimately, If you know what you want to do when it comes to home renovations you should research or consult with a professional about whether it is money wasted or money invested.
DIY Reno’s
| RENOVATION PROJECT | APPROXIMATE COST* | APPROXIMATE ROI** |
|
$1,000 | 50-100% |
|
$2,000 (for 1,000 square foot space) | 50-75% |
|
$2,000 | 60-70% |
|
$2,000 | 25-50% |
|
$2,000 | 75-100% |
|
$3,000 | 50-75% |
|
$5,000 (for 1,000 square foot space) | 50-75% |
|
$5,000 | 50-75% |
Renovations with best return on investment, some help may be required
| RENOVATION PROJECT | APPROXIMATE COST* | APPROXIMATE ROI** |
|
Under $5,000 | 80-100% |
|
$5,000- $8,000 | 75-100% |
|
$12,000 – $15,000 | 75-100% |
Notes:
*Assumes mid-grade quality finishes, labour excluded
** Source: Appraisal Institute of Canada RENOVA,
Guest Post by: Stewart Blair is a Sales Representative for Prudential family Realty; brokerage. You can also find Stewart on Facebook and Twitter.
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Photo Credit: Belongs To Stewart Blair
Most of the cost of renovation is labor. We always do everything ourselves, so I don’t think we have lost money on any of our jobs.
We are finishing our basement now and it is a perfect example. A friend insisted that I ask his remodeler buddy to bid out the job. With a sigh, we said OK. His bid was almost 60K! I priced out the materials and its going to cost me under 15K to do it myself. I’m actually going to try to get it under 10K (hello Craigslist!),
YouTube is really wonderful resource. You can learn how to do anything there. It may take you a little longer the first time, but after you’re done, you have a new skill that you can use over and over.
WOW, how big is your basement mate? Ours is just over 1000 sq ft and I’m hoping not spend that much but I also won’t do it cheap and want to use quality materials. I’ll be doing most of the work myself except when it comes to some of the trades guys I”ll call them in.
Painting can really make the place more enticing to the home buyers and it’s cheap!
Rose
Great Article! I found your ROIs were dead on! My expireince has taught me that budget renovations are usually the way to go if you are trying to increase your home value. As in the more money you invest, the less you get back. I will be doing a series on budget renovations on my website, http://valuearchitect.wordpress.com/ I would appreciate it if you could follow and give me some of your input!
Thanks for all the information! It’s a great help!!
Paint can definitely make a huge difference. When we bought our house all of the colors were load and bright. We toned them down with browns and darker earth tone colors and it looks a great deal better. Light is problem that we are currently facing. I would love to add four canister lights in my living room. It would make a huge difference since it faces the north. These are great tips and things people should think about before purchasing a house.
Also consider using mirrors, they can help make rooms not only larger but brighter.
Oo this is a great post! I often wonder which renovations will get the best increase in home value, and now I know! Thanks for this.
thank you for this post. So i guess it is good to buy a fixer upper if you plan on re-selling then you could up the value of the house yourself. It would just land more profit in your pockets. This post is great as I will be a first time home buyer in the next year or so. I love you post and thanks for sharing
Carrie, another great option can be a brand new home. A lot of times their value increases almost as soon as they have built it. You really have to figure out if you would prefer to renovate or live on a building site!
Renovating can be crazy! The final product is worth it though especially after you see how much the house has changed when you are done with it. Great post!
Renovating a house can be crazy! I know I almost threw in the towel a few times when I was renovating mine. The look and feel of the house afterwards was worth it though even though we went into some debt that we have since paid off.
Great tips! When we sold our place, we had it painted, a railing put in (should have done that years earlier!), and staged. It sold in 4 days. Well worth it!
I would be too worried about stuffing up doing my own DIY renovations. Much easier for me to use a contractor and not accidentally knock the house down.
Some home renovations are just worth it….especially if it keeps you from moving and buying a more expensive home! We have done some remodeling here….but I think we’ve done all we can do at this house. I would like a house with a completely different layout in the future!
We redid our kitchen a few years ago, and an appraisal soon after concluded that we got about 120% back on our investment.. money well spent, indeed! 🙂
Kitchens are always popular. Everyone always says it, but we really spend a lot of our lives in the kitchen. Makes sense they would be a popular reno.
My good friend flips houses for a living. Everything you mention here is EXACTLY what he takes care of to make the house appealing. Also, he is a big fan of open spaces and tries to make the layout as open as possible even if it means taking out some walls. Excellent information!
Excellent guest post. He was right on about carpets in the bedroom. We recently covered a bedroom floor with carpet and it’s made a huge difference…..I’d been reticent to do it because hardwood is so “in.”
I have not completed any “major” renovations to sell my home…actually my home is only 6 years old and I do not intend on leaving anytime soon so I have never completed any renovations. We have built a nice deck out back and coloured concrete curbing and steps out front and some gardens in the front and the back which would help with curb appeal. We do intend on finishing the basement at some point. When we had that home renovation tax credit available a few years ago we bought a ton of the wood for finishing it. We also have a sink and toilet, some wiring, various other things. I am wondering what sort of ROI finishing the basement provides?
Jen: Building a deck is great investment and improving your curb appeal always helps with the first impressions. As for the return on finishing a basement, a local realtor could easily give you an accurate idea. they would be able to check all homes in your area that have sold, with and without, finished basements. This would let you know a) how much you should spend and b) what the likely return is.
Great guest post! There are so many little upgrade you can make to you house that will freshen it up and not cost too much money (light fixtures, hardware, paint).You have to remember not to over renovate for the area you live in if you plan on moving!
We have been renovating for the last 3 years. My house is over 100 years old and nothing was upgraded in many many years. I bought the house cheap, as I was a single mother at the time. It’s a slow and costly process. First we stared with adding a large new addition, as we needed the room for our family got much bigger after I got remarried. The addition is one large master bedroom with a walk in closet and a large on-suite, full basement (some day to be a rec room), plus a storage room.
We saved money because my husband put in the foundation and designed and framed it. The rest we had to pay people. Most of them was people we know, so they worked cheap. We also replaced all the old doors and windows in the house. That was a great decision, we knew they were old but didn’t realize how bad they really were. When I was ripping out the old trim, the windows just fell out, plus they were all single pain.
Last year we renovated are very old upstairs small bathroom, as we had a bad leak in the walls. We decided it was better to gut and do a new bathroom, instead of a quick patch up. We changed the whole design, everything was changed! The old tub/shower was located in a slanted wall, so anyone taller than 5’4″ would have to squat or kneel. We put in a stand up shower, kept the same toilet but moved it, and a new small sink for better room. It was so crowded before, it wasn’t good for any large people. It’s quite beautiful now. It was costly, but worth it with 3 teenagers in the house. I also have been slowly redoing all the bedrooms upstairs; Getting rid off all the old wall paper, repainting, changing lighting, and new floors.
Next we are working on the living-room, dining room. I have already ripped up the gross old carpet, to show the old hardwood. Next is drywall. Wish us luck.
In all honestly, I think we should of bought a new house, but it would of cost us the same, just not all the hassle.
Jennifer, sounds like you have taken on quite the overhaul. I am sure it will be amazing once it is all completed.
as long as the renos r done right n complete to finished then all is good nothing like looking at a reno n seeing a step that was missed. great tips thanks
Oh Jeff, the stuff I saw when looking at houses scared me. That is why we opted for a house that the basement was NOT done. I had seen enough bad DIY jobs in houses with our agent it made me nervous. I’m no pro but I’m also not an idiot who pretends to know what I am doing and spends money twice!
i bought 8 years ago diy projects r never ending lol im taking a break for through winter though i ran out of money
i just ripped out my carpet throughout the hall way and living room it was so old and nasty i didnt have any money to replace the flooring though so i painted it i got a great deal on good paint through my neighbor and she also gave me a rug and a friend of mine bout me a rub to so turned out really cheap and was done with in 5 days mostly by myself 🙂
Hey that’s pretty good. It’s great when people come together like that. We have some nasty carpets as well, can’t wait to get rid of them.
I have tonnes to do myself but we know we will be here for a while. We have no intentions at the moment to go bigger unless a sweet offer presented itself.
Paint is by far the best and cheapest facelift when selling or buying a home. Not only for appearances but smell quality as well….I was told this by several real estate agents.
Maybe the prices in Canada are hugely different, but some of those cost estimates seem REALLY high compared to our experience.
Paint for 1,000 sqft home with store brand top quality paint ~$350
New door handles, locks, hinges, cabinet/drawer pulls in same house ~$400 (and that’s inflated since we splurged on an electric lock system).
I can tell you in my research that I can buy items in the USA for MUCH cheaper than in Canada. Sometimes it just boggles my mind.
The prices were average out by the appraisal institure here in Canada, i agree though, a lot of materials can be found cheaper south of the border!
I’d spring on a fresh coat of paint when selling my house, but otherwise would consider all home renovations as lost money, to make my house a home. I will live there for a few years, enjoying my place and that is worth every renovation penny, even though I don’t make back all of it when selling.
Why would you consider your home renovations lost money?
I consider renovations lost money because I don’t make them as an investment. It is a cost to be comfortable at home and if I don’t get the money back when I sell so be it, I deserve a nice home to live in while I own it. I wouldn’t do them based on an hypothetical return. Of course if I can get my investment back even better.
I’m definitely gonna have to remember to refer back to that cost grid, that’s awesome! And I used to be super obsessed with all those home shows on HGTV and it’s true. Potential new homeowners would look at the wall colour, kitchen, bathroom, floors, and outside, and everything else didn’t really matter. It always bugged me when someone trying to sell their house wouldn’t paint their wall a neutral color but leave them bright pink or green. It’s such an easy fix!
No kidding, really it would make the house so much better. I see it all the time. I remember house hunting in Canada. It was great because I had only been in a couple houses here ever. I was shocked at the easy things people failed to do but would have helped them sell faster or make the house more appealing like paint.
We purchased our first home in January 2007 for $1500.00. It was in really rough shape, full of warped wood panelling, dingy carpet, bad electrical and plumbing so we completely gutted it. Replaced all wiring, plumbing(went with PEX instead of copper), insulated and put vapor barrier in, new floors, plumbing and light fixtures, electric heaters as well as a wood stove, cupboards and gyproced all the walls. Crack filled, sanded and painted everything ourselves. It took us just over a year to complete and after moving in we discovered that the roof leaked, so we put a new steel roof on as well as a deck. Some days this place seems like a money pit, but it has been a good home to us for the most part. Our family has grown here and we’ve made it ours. We’ve put just over $17,000 into it and countless hours of work. We did all of the renovations along with my Dad’s help, and learned a lot along the way…made a few mistakes too. Considering what we paid, I’d say we did pretty good 😀 We’re also living mortgage free and there’s nothing wrong with that!
Karen, I always say the problem with renovations is once you have done one, you need to keep going. It always starts out with one room and ends up being the entire house. Happy Renovating 🙂
This is great info to have! Won’t be using it immediately, but will bookmark it for the future.
Jason my website is http://www.LondonOntarioRealty.com or facebook is http://www.facebook.com/londonontariorealty
And to answer you comments – sometimes just freshining things up can make a difference for potential buyers. For example, changing the hardware on your cupboards and doors to give a more modern feel, or a fresh coat of paint never goes a miss. Inexepnsive fixes and then the real value to you, will be actaully selling your home.
I fixed the links not sure what happened there, thanks Jason!
We’ve done small reno’s here and there since we moved in (painted all the bedrooms and dining room/kitchen, tore out the carpet and put down wood in the living room, and some other outdoor projects) but the largest so far that we did ourselves was to redo our bathroom – new flooring, new paint, new light fixtures, new sink (went from 80’s style vanity to a nice pedistal), and added shower doors. It was alot of work but it turned out amazing! Even though we have no intention of selling anytime soon, I know the reno we did added alot of value to our house if we did decide to sell now. Next on the list – KITCHEN!! and boy I can’t wait to have the money to hire someone for that 😉
This was excellent info as we were considering replacing all the carpeting in main areas and fencing in the yard. Now I know that our initial investment will be worth it in the long run.
Very helpful information for when we look into our next place 😉
Sweet, I built a fence and added a patio/pergola to the back yard. I’m hoping for a 75% ROI, that would be awesome.
I would also say that you should upgrade your home in a way that you enjoy, not just for re-selling purposes. Of course, you want to be within reason and know that if you plan to sell in the future, you need to make sure the upgrades are ‘neutral’ enough for that, but also don’t forget to make your house a home.
Nice post. I remember when my wife and I bought our first house five years ago looking at many of these things and it usually only took a few things to remove a place from consideration. We have a few fixes we have to do currently and are going over which will be best for us as well as what will be best for the long term value of the house.
It is always helpful if you are able to do the work yourself.
Stewart…. You just mentioned what is refered to around here as Murphy’s Law of home repair!!!!!! One job leads to another and another and another………..The first thing we had to do with this house was re-wire the whole place. We replaced the fuse panel with a breaker box and when the inspector was here for that we showed him around. Some of the things done here with wiring were a safety hazard. He just shook his head and said he was glad we were doing it. You can’t pinch holes in the walls when you are looking at place to check things like wiring but we saw enough to know it was a nightmare!!!! I didn’t sleep the first year until the wiring was done as Hubby worked nights and we had 3 young kids that I’d be trying to get out by myself if anything had happened…. And that was not a far fetched fear…. It was so bad here!! While we were working on the wiring I still remember helping to feed wire through and having it fall apart in my hands!!!, Scary!!!!!
FYI – it looks like the link to Stewart’s site is incorrect.
I spent the whole weekend watching renovation shows and I absolutely love them! The problem with renovations is coming up with the cash; we tried to sell our home this past year and I’m just not sure how much value we can add to our home by upgrading our countertops or doing a remodel of one of the bathrooms. Our home is only 8 years old, but you can tell some of the things are getting a little outdated.
Thanks Jason, I’ll sort that out now!
I would agree with all those, especially new paint and taking out nasty carpet. A new faucet, paint and hardware can make a dated kitchen look new for little $$. I’m surprised more people don’t take a few simple steps before listing their homes.
Great post! Love reading all the posts of what to look forward to when i finally purchase a house. Us personally rent still so the only updates we have done to our home is paint. The rest the landlord does. However i do know from my parents home that just by redoing their main floor (new kitchen and bathroom) they have already been able to see a return on investment by what their real estate agent says. Was so worth it for them to do their kitchen. My dad did all the work himself so he only paid for supplies so i guess that helps save a lot of money as well. 🙂