One of the most common discussions with potential sellers is the topic of renovating prior to selling. Should we finish the basement, or perhaps update our kitchen? While everyone looks to maximize their investment when it comes to selling their home, the decision to renovate is complicated.
From my experience, sellers are far more intimate with the shortcomings and design flaws of their home and as such, tend to focus on these items as potential ‘roadblocks’ to selling their home. While ensuring your home is as marketable as possible makes great sense, sellers are often shocked to learn that it can be difficult to get a decent return on their renovation investment, especially when time and sweat equity are considered. Of course, any such blanket statement has its exceptions, but I’d like to share a few thoughts:
Personal Style & Choice
Buyers often seek to put their own touch on a property. I’m amazed how often a couple will begin discussing remodelling properties within minutes of a showing. While there are those that seek to acquire a ‘move-in ready’ home, many people enjoy the process of design and improvement.
I guess we can thank HGTV for providing consumers with the confidence and interest to tackle that home improvement project. Deciding against remodelling, and applying that budget as a discount in your home price may well enable potential purchasers the financial flexibility to undertake their own renovation plans while saving you time, frustration and money.
Market Positioning
Depending upon the complexity and ultimate cost of your renovation, undertaking projects that represent big investments can push your property beyond the ‘hot’ market segment, into slower-moving categories which can be frustrating for those seeking to sell quickly. In Peterborough this summer, we continued to see a strong entry-level market ($400,00) but some softening as prices climbed over the $500,000 mark.
While many agents are not willing to openly discuss the current market conditions, looking at the data supplied by PKAR (Peterborough Kawartha Association of Realtors) supports this theory. We’ve actually experienced an increase in the Average Days on The Market which is being driven by slower sales in mid to higher-end homes in Peterborough. It’s a great market to move up in and can be a frustrating market to enter or try and downsize in. This condition can lead to sellers in mid-priced homes discounting pricing if they are motivated to sell.
Perceived Value
It can be really discouraging to learn that while your dream master bathroom renovation may have cost $25,000, it may have only added $15,000 to the sale price of your home. There are many articles available online that quote statistics of the rate of return of renovation dollars spent in various areas of your home. Again, a blanket statement can always be challenged and those that have a flair for renovating on a tight budget can often leverage their efforts and skills, but time is money, and it’s worth doing your homework. As a simple example, a wonderful freestanding tub may not be of value to people who prefer showers.
One thing is clear when it comes time to considering selling your home – putting your best foot forward is always important. Fresh paint, some basic curb appeal landscaping, de-cluttering, and staging will ensure you home shows well. In my experience, first impressions are huge, and it’s often as we walk up and open the door that buyers form immediate opinions that can lead the showing. Regardless of whether you’ve done some major renovating, a well kept, neat and tidy home sends a positive signal to buyers.
If you’re thinking of selling, or renovating prior to selling, I would be more than happy to provide you with some data to assist with your decision. Feel free to contact me at 705.933.9191 and let’s chat.
