Rate the Resale Value of your Reno

While some renovations may pay for themselves by increasing the value of your home, others could hinder a resale. Here’s what you need to know before you book that contractor.

There are lots of reasons for making home improvements, whether to customize a home to your needs, do repairs and maintenance or make a home more appealing for resale. But all not renos are equal when it comes to how they influence the value of your home. Here are some factors to consider.

If you plan to stay

If you plan to stay in your home for a while, and personal enjoyment or maintenance is your main priority, make your reno choices based on your needs and your budget. If you’re not expecting to move anytime soon, it’s best not to assume you’ll necessarily get your reno investment back, further down the road. After all, home improvements have a shelf life, and any renovation can become dated over time.

If you plan to sell

If you’re planning to sell in the next little while, and see your renovations as a way to add value to your home, you may want to take a different approach to your decisions. According to the Appraisal Institute of Canada’s 2004 Home Renovation Survey, the renovations that provide the highest payback potential are bathrooms and kitchens, with a potential investment return of 75% to 100%, and interior and exterior painting, with a potential return of 50% to 100%.

An eye for the buyer

Once you start renovating and decorating for the critical eye of buyers, you will have to consider their tastes as well as your own:

• Choose tasteful, neutral colours and materials that will appeal to the widest possible audience.

• Avoid cutting corners. The quality of workmanship and materials is also a factor in the return on investment.

• Ensure that the home feels consistent throughout. A luxurious new kitchen will look out of place if the rest of the home looks shabby.

• Try to imagine the type of buyer your home and neighbourhood will attract. A starter home for young couples, for example, might not benefit from a lavish bathroom, whereas an executive home might recoup the costs more easily.

Above all, remember that you may not get all your money back. Ask yourself if you’re willing to put up with the inconvenience and stress of a significant renovation like a kitchen or bathroom remodel.You might consider other, smaller improvements that can help your home show better. Replacing flooring, installing a new furnace or replacing windows and doors can also bring good payback potential.

Renos that could cost you

Adding value to a home isn’t simply a matter of adding on the cost of your renovations. The market you’re in, your neighbourhood and local demand will all influence how much the home is worth. Be cautious of over-renovating beyond the price range of these built-in limitations. Adding other features may end up costing you more when it comes to resale. Swimming pools and hot tubs, for example, offer poor returns in colder climates because buyers see in them additional work and cost. Other renos that may fetch lower returns include landscaping, interlocking and asphalt paving, fences and skylights.

- Article comes Courtesy of TD Canada Trust