So what to do? Remodel or buy a new home?
Experts say that if the cost to remodel is higher than 10% of your home’s current value, it may be wise to sell the property and buy a new one, just like the one you want... and in the location you want.
But it is always a good idea to have some remodeling before listing your property. Most buyers—like you—pay close attention to kitchens, flooring, bathrooms, siding, windows and roof.
An important consideration before formulating your home renovation plan is remodel cost. Your budget will define how extensive the renovation project can be and whether your plan is feasible or not.
In some regions there are possibilities of qualifying for a renovation rebate program (like upgrading your old windows to Energy Star® products).
And do not forget to check the local building codes!
· Investment in home improvement is a key point in the competitive housing market.
· 79% of sellers made improvements to their homes in a period of two years prior to listing (39% of them did so with selling in mind).
Homeowners look to boot resale value by renovating. Doing so they bring their home up to today’s standards.
· According to Michael Polzler, Executive Vice President and Regional Director of RE/MAX Ontario-Atlantic Canada, “...with buyers visiting an average of nine properties before settling on the one they want to call their own, sellers need a distinct advantage over the competition. Location is still the primary factor for buyers, but a property’s condition also plays an important role. Our Survey found properties with updated kitchen cabinetry, hardwood flooring, new windows, an open-concept and a finished basement appeal most to today’s selective purchaser.”
· The most appealing upgrades were:
1) Kitchen cabinet
2) Hardwood floor
3) New windows
4) Removing walls and create open concept living
5) Finishing the basement
6) Kitchen appliances
7) New shingles
8) New bathroom taps and plumbing
Remodeling can make your home more valuable and saleable but it does not mean that you will have a return on investment higher than 100%. If in your neighborhood all houses have hardwood floors, buyers will expect to find this feature in your home. If you don’t have it, your house may be ignored at the time you put it on the market. But have in mind that if you spend $10,000 with the hardwood, the value of your house may increase in only $7,500. But the most important fact is that buyers may become interested on it.
The Appraisal Institute of Canada has interesting studies about renovations and expected returns on the investment. You can find it at the following address: www.aicanada.ca/e/resourcecenter_renova.cfm . The following table is an adaptation of the data from the site:
Kitchen renovation 75% ~100%
Build a fence 25% ~100%
Exterior / Interior painting 50% ~100%
Install central air conditioning 25% ~75%
Roof shingle replacement 50% ~80%
Landscaping 25% ~50%
Install a fireplace 50% ~75%
Bathroom renovation 75% ~100%
Basement renovation 50% ~75%