Renovations – Good for Resale??: Doing Your Homework - Should you renovate for personal enjoyment or resale value? Stop us if you heard this one: a contractor and a realtor walk into a house...

Among the sublime joys of owning a house, it’s hard to say where renovations rank. Judging by the number of home renovation shows on television, it’s easy to see how much people love the idea of home improvement—or maybe we just get a weird kick out of seeing the dismantling of other people’s homes (and their sanity, when something goes wrong). But more likely, it’s the ‘after’ part of the reno that we’re waiting for—the dream home that makes it all worthwhile.

Considering the regular maintenance that all homes need, adding a renovation to the mix can be a hassle and a significant outlay of money. Still, most can agree that the allure of a brand-new kitchen or bathroom, or finishing part of the house, is undeniably enticing.

But before you go knocking down walls, knowing ‘why’ you’re renovating is the key to getting the most out of a home makeover and could help you avoid unfortunate choices or costly mistakes.

Why Renovate?

Whether it’s for more space, to go greener or be more efficient, or to simply freshen up their surroundings, homeowners have plenty of reasons to renovate. As Neville Ward of Caruana Interiors and Contracting points out, at least some work is needed every 20 to 25 years. “That’s when houses kind of get to the end of their useful life, and stuff just starts wearing out,” he says. Renovating is an opportunity to update the look and convenience of a place.

“Not the convenience of 1994, which was maybe an outlet in the kitchen island,” clarifies Ward. “Now people want USB charging ports every three feet, and a TV near their kitchen.”

For many, hiring a contractor is the best way to get the experience and know-how that will help sharpen their design vision and deliver something to match it. “People usually have kind of an idea, but they don’t really know where to start,” notes Ward. More than a few of his clients find their inspiration on HGTV. But every house is unique—Ward’s starting point is an in-house visit and a discussion about the client’s goals, followed by some fine-tuning to finalize the plan. Only then do the nuts and bolts come in.

Whatever the reasons, there’s no disputing that many homeowners also hope to get something more than personal pleasure out of the deal. A quick internet search will turn up plenty of tips and advice on how to get the most bang for your reno buck. It can cost a lot of money, after all, and one way to justify the expense is to view it as an investment.

“That’s a tricky one,” notes Ward. “I’d say, first and foremost, people have to do a renovation for themselves. It doesn’t help my bottom line when I tell people, ‘Yeah, you’re going to spend $100,000 on your kitchen and living room, and you’re not going to get anything extra when you sell it next year,’ but I’m honest about it.”

Moving On and Many Happy Returns

Nonetheless, for anyone planning to list their home, there’s no doubt that renovating can potentially help—if done right. In a real estate market where buyers have a lot of options to choose from, the extra appeal of a renovated house can give it a leg up on its competition. According to realtor Jay Herrick of Re/Max Elite, this often translates to quicker turnaround.

“Renovations will reduce the days on market, and they will typically add value to the home, possibly putting the value of the house above the market value of a house that’s not renovated.”

Would-be sellers still have to be careful about what and how they renovate. A full makeover before listing will not only be costly, but also unnecessary in most cases. At the very least, there’ll be diminishing returns on the investment. Certain jobs, too, tend to be less profitable than others. Herrick gives landscaping as one example. “Nobody will pay you back for $70,000 worth of paving stones that you put in, or a fountain that they have to maintain.”

Likewise, if resale is the main motivation, changes that scream “all about me!” are probably a bad idea—like dropping a couple thousand to paint your kitchen cabinets a hot shade of pink, when the trend these days is white or grey. “Many times, I see renos that are too specific to somebody’s taste and there’s no value to anybody else,” Herrick says. “The renovations we see people getting good value on are those appealing to the majority of the market.”

Bang for Your Buck

This begs the question—what are those “bang-for-the-buck” renovations? Again, it depends on what you’re hoping to get out of it. From a realtor’s perspective, the good renovations are the ones that sell homes, and they tend to be rather focused. Herrick suggests starting with the paint and flooring, as those are relatively quick and inexpensive and will do a lot to freshen up a home. In fact, the Appraisal Institute of Canada lists repainting as one of its top five renovations with the highest return on investment. Bathrooms and kitchens come next.

“Those will influence people to buy a home,” says Herrick, “but they’re also the most complicated type of reno.

Exterior renovations can also draw potential buyers in. “If curb appeal isn’t there, you can lose somebody right at the curb,” Herrick says. “They won’t even want to see the house because they’re not excited about the exterior.” The catch, though, is that exterior home renos can be very expensive. Then again, the right work can recoup a lot of its cost. Remodeling, a U.S. trade magazine, in its latest “Cost vs. Value Report” listed garage doors, stone veneer, and steel entry doors as the top three replacements or additions in terms of return on investment at resale.

About That Bill

When resale isn’t an immediate concern, though, the question of what renovations are the most valuable will come down to other factors—what needs work now, and what will bring the most enjoyment and convenience over the long run. Ward notes that bathrooms remain the most common renovation he does. These jobs can range from modest—flooring, tubs, toilets, faucets, vanities, and so on, are simply replaced—to complete revamps and customized spaces that are more luxurious or just use the space more effectively. Ditto for kitchen remodels, which can involve the rearranging and replacing of appliances, new cabinetry, new flooring, lighting, rewiring of the electrical system, and taking out or replacing walls and even ceilings.

Cost, too, can vary widely depending on what the customer wants, the age and condition of the house, and the materials used. Also affecting costs, and usually not for the lesser, are industry shifts that are out of the control of contractors and their clients. “Over the last couple of years, material and labour prices have changed significantly,” Ward says, citing increased demand and tariffs. With the recent minimum-wage increase, suppliers are charging more to cover increased labour costs. Ward estimates that a full bathroom renovation might range from $10,000 to over $40,000, with clients spending on average $18,000 to $22,000. Kitchens, unsurprisingly, are even more expensive, with wall-to-wall, floor-to-ceiling work starting around $50,000.

Do It Yourself vs. Don’t Try This at Home

Considering the cost of home renovations, it’s tempting for homeowners to try doing the work themselves, especially if they have the time and know-how (or think they do). It’s not always a bad idea, so long as you are realistic about what you can and can’t do. “What people have to understand is that things look easy on TV,” Ward says. “A lot of your big stuff isn’t complicated. It’s the small stuff that’s complicated.” Detail and finishing and little features like trim, toe kicks, and backsplash can be easily overlooked. Same with the time required to carry out a major job.

“It takes a crew of professionals six weeks to do a modest kitchen. Imagine what it’s going to take one homeowner working away on evenings and weekends. It could take you a year, easily, and you’re not going to enjoy it.”

Ward himself started out as a DIY guy, flipping his own houses before realizing that he wanted to do this as a career. “I sat down and read the entire electrical code,” he says. “That’s just me being a nerd.” While he describes minor electrical work—like changing plugs and switches—as “usually not life threatening” provided one follows basic instructions, some jobs are still better left to the pros. “Plumbing is actually worse than electrical,” he explains. “One little drip off an e-pipe [epoxy pipe] once a day, you’re not going to notice it for a couple of years. But when you do notice it, it’s going to be horrific.”

Parting Advice

For those considering a makeover, Herrick suggests getting multiple quotes and choosing a quality contractor. “With the economy we’re in, you should be able to secure a reasonable price,” he offers. The advice holds whether or not you intend to put your house on the market. But if that is indeed in your plans, he also recommends talking to a designer or realtor to get the latest on current trends. Knowing what’s selling and what isn’t will help you make the right choices—as well as knowing who it is you’re selling to.

“Renovate to their tastes, not your own. I mean, if you’ve got a 3,000 sq. ft. house in St. Albert, it’s going to appeal to a family. We’re not trying to sell it to a downsizing couple.”

Ward takes a longer view of things. For him, the main point of a reno is to make a house a home, and a better and more convenient place to live. “the customer has to get the full personal value out of those renovations,” he explains. “if a sale is on the horizon, then just be modest about your design. It’s more important that a home is clean and looks well maintained, because you never know what somebody else’s taste is going to be coming in.” T8n

 

Reno Trends in Canada

Here’s what happened last year on the Canadian renovation home front, according to a 2018 CIBC poll on home renovation trends.

 

• 45% of homeowners planned to renovate in 2018, and had budgeted $10,959 on average (down from 2017, when 48% of homeowners planned to spend $11,795 on renos).

 

• The most common renovation projects in 2018 covered basic maintenance (52% of homeowners), followed by landscaping and bathrooms (both 39%).

 

• Of Canadians ages 55 and over, 71% preferred renovating to selling their homes. On average, they planned to spend $10,800 on renos (down 36% from 2017).

 

*Source: https://www.newswire.ca/news-releases/canadian-homeowners-trim-spending-on-home-renovations-in-2018-cibc-poll-684137711.html

 

Renovation ROI

Remodeling magazine’s 2018 “Cost vs. Value Report” outlines the top renovations in terms of the percentage of cost recovered at resale (in U.S. dollars).

1. Garage Door Replacement

Cost: $3,470

Resale value: $3,411

Cost recouped: 98.3%

2. Manufactured Stone Veneer

Cost: $8,221

Resale value: $7,986

Cost recouped: 97.1%

3. Entry Door Replacement (Steel)

Cost: $1,471

Resale value: $1,344

Cost recouped: 91.3%

4. Deck Addition (Wood)

Cost: $10,950

Resale value: $9,065

Cost recouped: 82.8%

5. Minor Kitchen

Remodel

Cost: $21,198

Resale value: $17,193

Cost recouped: 81.1%