Today's Real Estate Question: Does it Pay to Renovate?

Real Estate ROI: Renovating

If you’re thinking of making changes to your home and wondering whether these will be “worth it” to you and are not able to decide, you’re not alone. Every year, many homeowners face the same question — will it pay to renovate? —  and Realtors are a great resource to help you find the answer that is best suited to you.

Home owners renovate or upgrade either for their own enjoyment or with the hope that changes will help them sell their home faster and/or for more money. Assuming you don’t have unlimited funds, you will have to make choices based on what is more important to you — more enjoyment while you plan to live in the home or better resale potential. What improvements, if any, should you make? Which improvements, if any, will give you the best return for your time and money?

If you have time and $10,000 – $15,000 to spend on improvements, how can you wisely invest the money in home improvements? Should you revamp the bathroom with new fixtures and trendy colours? Have the sooty buildup removed from the brick exterior? Put in a skylight? Obviously, some improvements are more advantageous than others. However, there is no perfect test to determine the best way to spend your home improvement dollars.

Increased saleability and increased market value do not always go hand in hand. Increased market value usually spells increased saleability. However, improvements that make your house easier to sell won’t necessarily get you a higher price.

In Realtor research conducted by the Canadian Real Estate Association, 39% of real estate agents surveyed thought that adding a recreation room to your home would “greatly” improve its saleability and another 42% thought it would “somewhat” improve its saleability. Only 17% of agents surveyed thought that adding a recreation room would increase the value of the house by more than the cost of building it in the first place.

Fully 69% of the agents surveyed thought that a homeseller would either just earn the investment back when they sold or else come out with an actual loss. In practical terms, this suggests that building a recreation room might be a good idea if you think your property’s saleability is poor. It may not be a great idea in terms of return on your investment.

Interestingly, perhaps the best improvements to make are to existing rooms, specifically bathrooms and kitchen areas. The addition of a garage also suggests improved saleability.

In conclusion, it’s important to remember that although these survey results are helpful they are only an indication of general views. Every house and market are unique; hence, improvements affect their desirability and value differently.

If you're thinking about renovating and looking to appraise the value of your home in preparation for listing, feel free to connect with Team Brad Bird. We’re here to help!!