Renovating For ROI – Tips For Getting The Best Return on Real Estate

Photos courtesy of Joshua Lawrence, Kingfisher Painting, Nikki Jardine, Rus Collins, Jody Beck, and Andrew Schroeder.

There’s nothing like longer days and the sweet smell of cherry blossoms to spark the moving bug. If you speak to any real estate agent there are definitely preferred seasons for listing and selling your home. Blooming gardens and lush greenery certainly add to the curb appeal of your home and affirm that spring is best time of year to list. MHV consulted licensed REALTOR, Dustin Miller, from Sotheby’s International Realty, to provide us with renovation insights and tips to consider before going to market in Victoria.

What type of renovations appeal most to buyers in the Victoria market?

This really depends on the type, condition, and location of your property. Much of Victoria’s residential inventory is between 40-100 years old and brand new homes and condos are relatively limited. Renovations are a great way to update a room or transform the flow and way you interact with your home. Conducting a renovation before listing your house for sale will send a message to buyers that you’ve taken care of your home. Adding to buyer confidence, renovations put buyers at ease when they see the owner has taken steps to proactively maintain the property.

Four must-haves before you go to market in Victoria:

  1. New or updated roof and soffits.
  2. Updated heating system (get rid of those oil tanks asap).
  3. Updated electrical and plumbing (200 amp, no knob and tube, copper pipes).
  4. Working drainage systems to keep water away from the home.

Once the ‘must-haves’ are addressed, you can start looking at other improvements. However, additional renovations must be done with caution. Large renovations don’t always increase the value of your home by a proportional amount. In fact, as a REALTOR®, Miller has seen expensive renovations that have detracted from the value of the home and even deter buyers.

According to the Appraisal Institute of Canada, “if the value of your house exceeds the average market value in your neighbourhood, your renovations will not yield much return. But if your house value is below the average, you can recover a larger part of the renovation costs.”

What exterior renovations add value in the eyes of a buyer?

Like a book’s cover, home exteriors are a buyer’s first impression and provide a sense of the quality of the interior even before they step inside. Often referred to as curb appeal, here are a few simple and inexpensive ways to enhance the facade of your property:

1. Paint. A fresh coat can do wonders if you keep the colour in touch with the neighbourhood and personality of the home. You want to appeal to the broadest segment of buyers, so be conservative.

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2. Sweat equity. Grab your partner or kids and tackle the yard for an entire weekend. Raking, edging, weeding, hedging, pruning, fertilizing, and mowing can make a significant impact on curb appeal. Window cleaning and power washing the driveway, walkways, and siding add a shine and sparkle to make a positive first impression. Many sellers neglect their sale property once they fall in love with a new home. Remember you need to find someone to fall in love with your home too.

3. Lighting. Take a step outside at night and replace any burnt out lights. If your property appears dark, consider investing in light fixtures on stairways, paths, and gardens. Serious buyers will drive by your home multiple times, so keep your lights on at night to help showcase your home’s improved curb appeal.

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4. Doors. Replacing an aged front door with a fresh, high-quality one can often pay back over 70% on your investment and significantly improve your entrance and curb appeal. The same rule applies to a new garage door replacement.

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If your property has expansive green spaces, setbacks, or patio areas, professional landscaping can be valuable, especially if selling in the summer months, but keep your budget within reason. For most properties, investing thousands of dollars on professional landscaping is unnecessary.

What interior renovations will yield the best return?

1. Kitchens. Not a surprise, but kitchen renovations will give you the best ROI compared to any other room in the house. A kitchen upgrade often yields a 75% to 100% return on investment. Remember to carefully calculate your budget and to take into consideration the average house price in your area to ensure that you aren’t pricing yourself out of the market should you choose to sell. Today’s buyers expect stone countertops, large under mount sinks, quality appliances and fixtures, and soft close cupboards. Consistency is key to the kitchen’s design. It is risky to get overly personalized and mix and match different colours of countertops, backsplashes, or cabinetry as it can add an inconvenient project to the buyers to-do list.

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2. Bathrooms. Buyers often prefer bathrooms with a soothing colour palette and modern design with chic materials and finishes. Installing sliding glass doors on the shower instead of curtains are an easy home-depot project. Other valuable improvements are new ultra quiet fans, heated floors, and storage space. Bathroom renovations typically yield a 75 to 100% return on investment.

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3. Income suites. Victoria is an expensive place to live, so taking the time to add a basement apartment, an attic or loft conversion or a coach house style suite in a garage, when done correctly, can often double your investment. An income suite adds a significant amount of value to your home and can help you make money while you build equity.

4. Flooring. Hardwood floors are the number one requested type of flooring by prospective homeowners. Hardwood looks fantastic, is classic and super durable. Make sure to do your flooring research so that you get the most bang for your buck.

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5. Hardware and Fixtures. Homes that look fresh and updated always sell faster and often at a higher price. A very simple way to modernize the look of a home is to update accessories like faucets, sinks, toilets, cabinet hardware, doorknobs, and light fixtures. Hardware updates can improve the entire feel of a room and a small investment can equal a big return.

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If you are planning a large-scale renovation with the hope of significantly increasing the value of your home, you must consider your audience. Demographic research will provide you with valuable information to determine who will most likely buy your home: a new family, an elderly couple, working professional, or a single bachelor. Custom renovations that stray from the status quo can limit your audience and increase your days on the market. Always consult the opinion of a trusted realtor before undertaking renovations for resale purposes. Once your upgrades and deep cleaning are done, you might just realize that you actually want to stay.