Moving to a home that has the square meterage and features you want could be a big hassle. You need to find a real estate agent to list your current home, clean it up and prepare it for sale, stage it to some degree (removing any personal touches, so would-be buyers can visualize themselves living in your house), endure an endless parade of realtors and potential buyers traipsing through your living space, negotiate a deal you can live with, and finally close.
While all that’s happening, you need to find another home to move into, on what could be short notice; hopefully, in an area you love as much as your current neighbourhood. And then you have to scramble to pack up everything you own and completely uproot your life.
In many cases, the sellers are leaving a home that needs a remodel, so the selling price may require a reduction or two before it sells. And the home that has everything they are looking for will end in a bidding war, most likely selling above the asking price. Selling low and buying high is never a good investment strategy.
It’s human to make decisions based largely on our emotions, but selling and buying real estate can build equity and property value over time when our emotional choices are accompanied by quality financial decisions.
Renovating to increase the value of your home to prospective buyers
A short-term strategy could be a good choice for positioning your home for a sale in say 3 to 5 years. The children may be in their teens, and they’ll be heading off to university or moving out on their own soon. Or, you may be considering downsizing in a few years. A renovation that positions your home to be one of the more attractive properties on the block could be a solid investment, particularly if the costs are kept in check.
According to the RE/MAX 2021 Renovation Investment Report, in which RE/MAX evaluated 31 housing markets across Canada, almost 60% of the Canadians surveyed said that they considered the return on investment, whatever their primary reasons for renovating were.
Here you’re looking for simple, affordable upgrades that provide a better living experience and functionality, while also increasing the perceived value of your property, so you can recoup much of the costs when you’re ready to sell.
- Replacing dated or worn flooring was listed in 14 of the housing markets in the RE/MAX study as a top three renovation for return on investment. Professionally installed, new flooring can deliver an impressive return on investment between 100 and 150%.
- Updating the finishes of your home can have a significant impact on the perceived value of your home. A relatively inexpensive coat of paint, new light fixtures and changing the front and garage doors can make a big difference in the way your home shows.
Many Realtors and real estate experts argue that painting the house inside and out can increase the property’s sale price by up to 5%. Painting was chosen as one of the top three renovations for a return on investment, in 18 of the 31 Canadian housing markets in RE/MAX’s study. A fresh coat of paint can provide a 60% return on investment.
Exterior upgrades like trims, gutters, siding or stone veneers, when professionally installed, can contribute significantly to your home’s curb appeal. According to the RE/MAX study, exterior upgrades have a return on investment of roughly 50%, which placed them in the top three in one of the housing markets.
- Stepping up your curb appeal with some basic landscaping, new plants and fresh mulch is another cost-effective way to visually influence not only prospective buyers but also appraisers. Appearing in two housing markets in the RE/MAX study, clean uncluttered landscaping is one of the simplest ways to update your home’s exterior and boost its value.
- Upgrading the kitchen and bathroom(s) rated among the highest in the RE/MAX study. Kitchen counter upgrades ranked in the top three highest returns on investment in 27 of the 31 housing markets in their study. Kitchen renovations typically will deliver a home improvement return on investment of 75 to 100%.
According to the study, bathroom makeovers ranked as one of the top three renovations for return on investment in 17 housing markets, including Vancouver. The typical return on investment is 62%.
- Finishing the basement appeared in the top three list for return on investment, in five of the housing markets studied by RE/MAX. A basement renovation that will save the next owners money over time typically has a 75% return on investment.
Unutilized space that is cold, damp, mouldy or represents a significant renovation to the buyer could be a deal breaker when it comes time to sell. Adding a good humidifier and vapour barriers can deal with dampness resulting from poor-draining soil.
Most basements are at some risk of storm flooding, so installing two sump pumps can mitigate that risk; a primary sump pump, with a battery-powered backup. Choosing inorganic flooring materials can reduce the chance of mould or damage as a result of moisture.
- A new roof made it into the top three in two housing markets in the RE/MAX study, Victoria and Winnipeg. If your current roof is nearing the end of its lifespan, a new roof can be money well spent, with a return on investment of as high as 75%. Including a transferable roof warranty can be a powerful closing tool for your Realtor when the time comes.
- New windows are another upgrade that may be driven by necessity; with increasing energy costs, cold spots in cooler weather, condensation and perhaps even mould. Windows will increase your comfort level and help reduce your energy bills during the winter.
Including a twenty-five-year warranty on recently installed triple-glazed windows is another powerful closing tool for your Realtor.
- An upgrade to energy-efficient appliances and LED lighting
Energy Star Canada is a voluntary partnership between the Government of Canada and the electrical industries, and the Energy Star label means that products have met or exceeded technical specifications for high efficiency. Upgrading to products certified by the Energy Star program is a great way to cut your electricity and gas bills while modernizing your kitchen and laundry rooms.
LEDs are the most energy-efficient lighting option available today, and switching to LED bulbs throughout, with modern new fixtures is a way to reduce your home’s energy consumption while updating one element in each living space. Energy Star-certified LEDs can last up to 25 times longer than traditional incandescent or halogen bulbs.
Extending your home to increase its floor space, improve the floor plan or functionality
A longer-term strategy might involve structural changes to increase the enjoyment of your home, make it more functional while giving you more liveable space. With cosmetic renovations like painting above, the return on investment can be almost immediate – essentially upon completion – and those quick upgrades can represent a significant return, like 60%.
Expanding your home’s square meterage will almost always increase its value. Additional bedrooms or bathrooms, a larger kitchen, more living area, a laundry or mud room… chances are these are features future home buyers will be looking for as well, so they will end up paying for themselves. Due to the size of the investment for a structural remodel, homeowners are usually planning to live in the remodelled home for some time.
Expanding in many cases includes adding another bedroom or bathroom, increasing the size of the kitchen, adding one or more home-based offices, creating an open-plan space, moving or removing walls, or reframing to integrate a revised floor plan that will enhance your family’s quality of life.
What’s the difference between an addition and an extension? The easiest way to tell the difference between an addition and an extension is determining whether you’ll be adding on by building up (vertically) or building out (horizontally). However, it’s not uncommon for both vertical and horizontal expansions to be referred to as either extensions or additions. A third option exists; a detached unit, like a garage, guest house or carriage house.
Additions don’t change the building’s footprint, so you won’t have to give up any of your yard or outdoor space. A common addition involves adding a floor, or perhaps one or two rooms over the garage. Bedrooms can be moved to the new second storey, and this allows for reworking the main floor for more living space.
An addition can turn a house that has become too small into a spacious and modernized two-storey home in a matter of months. Adding a floor is typically completed by removing the roof from the existing structure, building the second story, and then installing a new roof.
Extensions typically offer the possibility of one or two extra rooms or enlarging a space like a kitchen. Instead of adding living space above, you are adding it to the sides or back of the existing structure.
With today’s high real estate prices, extensions and additions are an attractive alternative to selling and moving. Opendoor’s data, gathered from thousands of home sales in 2019, provides the median resale value percentage increase for 11 popular remodeling projects.
- Adding a full bathroom typically increases the resale value by 5.7%, according to Opendoor, while adding a half bathroom raises it by 2.9%. If you’re not planning to sell any time soon, the added functionality of having another full bathroom can make life a lot easier around the home, particularly if you have teenagers.
- Adding a 3rd (or 4th) bedroom delivers an average resale value increase of 6.2%, according to Opendoor. Homeowners typically recoup between 53% and 75% of the costs on resale, according to HomeLight. Beyond 4 bedrooms, additional bedrooms will have a diminishing return. If you need the additional space for family members, an extra bedroom or two can be priceless.
- Extending the kitchen, with a full kitchen remodel, increases the average resale value by 4.8%, according to Opendoor. Generous open-plan kitchens are now the epicentre of modern living. A kitchen extension can create a spacious open-plan living space for cooking, dining and relaxing with family, as well as entertaining.
- Add living space like a theatre room or open-plan living room bumps up the resale value by an average of 5.3%. Our homes need to be more fluid than ever before, and open-plan spaces have become a hallmark of contemporary homes, thanks to their ability to cater to almost any occasion.
The takeaway
Whether you decide on a short-term strategy, with renovations that enhance the curb appeal and visual enjoyment of your home; or a longer-term approach that involves reworking the floor plan and adding more space; the amount of value you’re adding to your home will typically be greater than the cost of the improvements.
Perhaps more importantly, however; you will avoid the hassle of preparing your home for sale, braving the real estate market and endless home showings, locating a new home and completing the purchase, and finally the big move. If you value your neighbourhood, you can create a home that checks all the boxes, without pulling up stakes.
Reid Madiuk's been putting on a toolbelt since he was twelve years old, alongside his father, one of Whistler's first residential builders. As a third-generation Whistler and Squamish builder, Reid brings over 20 years of carpentry expertise to designing and constructing exceptional homes.
