After home ownership, the second investment that Canadians love to spend their money on most are home renovations. While this can be a worthy adventure, it can also be the source of a headache if you’re renovating solely for the purpose of resale value.
Why? When you’re renovating for your enjoyment, you’re using or benefiting from the update or renovation until you decide to move and sell. On the other hand, if you’re thinking about selling soon and decide to do a big renovation costing tens of thousands of dollars, you may not necessarily see that financial or personal return. Suddenly overindulging in Italian marble or adding that breakfast nook no longer benefits you as much as you thought it would.
Ultimately it comes down to the state of the market and how that affects the sale price. The sale price, as we have seen in the local and national markets in the last year has little to do with what you as a homeowner wants to net, what your neighbour thinks your home is worth, or even what your bank appraiser concluded. This is because the sale price is determined by what the market will bear. What is a buyer willing to pay for your home? Or in light of last year, what were buyers willing to bring to the negotiating table when several offers were to be considered?
After nearly a year of wildly ascending home prices, most of us know it has been an excellent time to sell; but this principle surrounding sale price also applies when the market cools. Yes, the market is always changing. Mortgage rates, minimum wage policies, and other factors affect the market balance and can turn a seller’s market into a buyer’s market.
We’ve seen a great case for home renovations that can give a great financial return, so it’s a good time to reassess renovation plans now that more balance is returning to our real estate market. Staying up-to-date on home sales trends will help you make the decisions that will balance your financial and personal goals with your pocket book. That’s why talking to a REALTOR® is a great way to build a partnership with a professional who actively knows the market and can advise you before, during and after your sale. They’ll also help you narrow in on the most advantageous listing price. After all, don’t we all want to make smart decisions in real estate? The sale and management of your investment will likely be one of the largest transactions of your lifetime.