Should You Stay or Should You Go Now?
It’s a tough question for any homeowner – Should I renovate or should I sell? Many Kelowna homeowners are asking themselves this question given the current housing market. The right answer for you will depend on many different factors. Is it worth doing a major renovation just to sell your home? Have you made the correct calculations and do you know for sure you’ll be able to recoup the costs of your renovations in the sale? Will you turn a profit or suffer a loss? Will the buyers prefer a brand-new house, or are they looking for a bargain to fix up themselves? Will renovating your space make you fall in love all over again and stay? These questions, and many more, will have to be considered to determine if it’s right to renovate or safe to sell.
RETURN ON INVESTMENT
When selling, the first and most important consideration needs to be return on investment (ROI). It’s not worth conducting renovations if a) you can’t at least recoup the costs when you sell your house, or b) the cost of the renovations doesn’t at least match the increased value of the house you’ve decided to remain in. In addition, you have to decide if it’s worth the time and, sometimes, the hassle. For example, if you spend $50,000 on renovations and increase the value of your home by $100,000, then you’re doubling your ROI. But if you spend $50,000 on renovations and increase the value of your home by $55,000 you’re only getting a 10% ROI, and for most people this amount of profit isn’t worth the time, money, and commitment of initiating the renovations in the first place. So if you’re going to spend money on your home, it’s vital to ensure that this money is going to be put to good use and result in a higher profit at the point of sale or a significant increased value of your home. However, remodeling or renovating can provide non-monetary ROI in the form of increased comfort and enjoyment. Perhaps you are willing to accept a smaller financial ROI if you plan to stay in your home and just want the space to be updated or changed to better suit your needs and preferences.
THE COST OF RENOVATIONS
Renovations will take both time and money. You’ll need to weigh these costs carefully to determine if renovating is a good idea depending on your decision to sell or to stay. Even if you budget for renovations; it’s important to note that, more often than not, costs can run higher than what you initially anticipated. Creating a comprehensive budget helps you prioritise your needs and identifies how much you can afford to spend. Even with a budget in place, however, it’s advisable to give yourself an ’emergency reserve’ to absorb any potential additional expense.
The ROI of any given renovation project depends on the condition of the real estate market in your area as well as the quality of the work performed. But, on average, there are certain projects that show the greatest return on investment. The kitchen and the bathrooms are the top ROI earners, but there are many other renovations, some easy, some more expensive and elaborate, that will increase the property value of your home. Whatever you decide, you need to plan carefully so you don’t plunge into unnecessary debt or be unable to afford to finish the renovation.
It helps to have an agent on your side who is well versed with your local real estate market in general. Remember, everyone out there buying a house wants to purchase a bargain; you want to sell at a high price, they want to buy at the lowest price possible. Or maybe the right buyer is looking for a flip-house, one to renovate themselves, and will reject any home already renovated for maximum ROI. Instead, they are looking for underdog properties that fit their budgets. Ironically, leaving your aging home just as it is could end up netting you a better sale.
Whether you decide to renovate or to sell, one thing’s for sure, and that is you need to do so with the full understanding and consideration of all your options, so that you can make the decision that’s right for you and your family.
Whatever you decide to do with your home, rest assured that Accent Renovations can help. We are an award-winning renovations specialist based in Kelowna and proudly serving the entire Okanagan Valley. We are much more than a general contractor, from beginning to end we deliver quality results on all residential and commercial building and restoration projects.