With the Home Renovation Tax Credit ending today, you may have missed out on your chance to save some taxes while you renovate. But if you are planning to sell, you are probably thinking about renovating. Before you start, keep these few points in mind.
Image: Andrew Bossi / Flickr
1. Be realistic about the added value of renovating
We all know about flipping: buying a slightly distressed property, “fluffing” it to make it presentable and then re-selling it at a much higher price. But is it really worth doing?
There really aren’t any reliable statistics about this, but there is enough evidence to suggest that it all depends on the type of renovation. The trick with flipping, or renovating for the purpose of selling, is to keep renovations effective. Adding extra rooms can make a home look more expensive, but you will likely not recoup the expense of adding the room when you sell. In contrast, fixing a roof or water heater may not be glamourous, but it can be more profitable for you in the long run.
2. Try to improve the house’s flexibility
The best renovations are the ones that increase the potential number of buyers. Adding a Jacuzzi may sound nice, but not everyone needs one, and some people might think it is a wasteful addition. Adding more space for families – such as first-floor family rooms – and added powder rooms can be potentially more lucrative.
And the opposite is true: try not to perform renovations that reduce your home’s flexibility. Thinking of knocking down a wall to combine two perfectly fine bedrooms to make a bigger master bedroom? Don’t – you’ll be immediately reducing the number of people interested in your home.
3. Keep it simple
When renovating to sell, keep the renovations as simple as possible. Kitchen and bathroom styles change so quickly that they generally need to be changed every ten years or so to look their best and their cost can be astronomical. In contrast, re-painting the rooms in your house in warm, neutral colours can make a house look more inviting and economically add to your home’s value.
Another great and simple improvement is to update the baseboards in your house. Many homes from the 1960s have very blank, simple baseboards. Adding a more classic trim can help make your home look instantly more valuable at virtually no cost.
4. Avoid the personal
You may really like the colour purple, but if you are renovating to sell, it would be wise to note that most people aren’t as fond of it. Keep your renovations as generic as possible, and try not to add idiosyncratic touches like fluted columns and unique flooring.
And once again, just because something is expensive, it doesn’t mean you should add it. You may like them, but niche additions such as tennis courts, wet bars and hot tubs take away room in properties from other uses. Unless your potential buyers love these things, these additions will only get you low ball prices.
5. Remember your location
Finally, location, as always is key. One of the biggest mistakes some renovators make is to buy a house, overbuild for its location, and try to sell. Since location, rather than size, is usually the biggest determiner of a home’s price, the renovator would likely have made more profit maintaining the size of the house but updating its interior. Bigger is not necessarily better.
Heleen Jacobsen
Broker of Record with InfoMarket Group GMAC Real Estate
www.infomarketgroup.com
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