the answer to this question may surprise you. Many people believe that by spending some money on their property they will exponentially increase it’s value so as Realtors we regularly get asked questions like: how much more will my home be worth if I: replace the furnace, finish the basement, put a new roof on, or renovate the kitchen?
The answer frequently disappoints. The reality is that Buyers expect homes to be maintained and if they are not, they expect a deal. So especially with items such as a roof or furnace, a better questions is how much less than market value will a buyer pay if those items are not replaced? For other items that would more likely be considered an upgrade such as finishing a basement or installing a gourmet kitchen the buyers may be willing to pay more for your house than your neighbour’s house without those upgrades, but how much? A buyer may be willing to pay a premium to purchase a home that already has renovations completed so they do not have to endure a renovation or so that the cost can easily be wraped into their mortgage, but too much of a premium and they may feel that they’d be better off to spend those dollars renovating themselves.
According to the Appraisal Institute of Canada renovations can vary greatly on return of investment:
They other very important thing to consider when contemplating a renovation is a practice called over improving. In order to get the most for your money you will want to make sure that your renovation is aligned with your neighbourhood. Identical homes in different neighbourhoods can be worth dramatically different amounts, so how do you make sure you are doing the right renovations for your property? We are always happy to meet with our clients during this process, our committment to you extends well beyond the sale and we are happy to review your plans with you and give you an idea of what value they may add to your home. In the end, the best advice is to renovate for yourself, if you are planning on living in your home for years to come and you will get enjoyment out of the renovation, then profit isn’t necessarily the most important thing.