Remodeling with return on investment in mind is a wise choice, whether you plan to sell your Waterloo Region home in the next six months, in a few years or plan to stay in place longer than that.
Your house is a significant financial investment, so no matter what stage of ownership you are at right now, any money you spend on it should not only let you enjoy it more now, but also enhance its worth, so you can recoup it later when and if you do sell.
Recent studies show that the average Canadian homeowner undertakes 2.3 renovations or improvements before listing their property for sale, and 79% of homeowners make at least one change. Only 21% of homes are listed "as-is."
Best ROI on Larger Home Improvements
If you’re contemplating investing in a major remodeling project, the following 10 home improvement projects provide the best return on investment for homes nationwide, according to Remodeling Magazine’s 2023 Cost vs. Value Report.
1. Garage door replacement
Cost: $3,907
Resale: $3,663
Recoup: 93.8%
2. Manufactured stone veneer
Cost: $10,386
Resale: $9,571
Recoup: 92.1%
3. Minor kitchen remodel
Cost: $26,214
Resale: $18,927
Recoup: 72.2%
4. Deck addition (wood)
Cost: $16,766
Resale: $11,038
Recoup: 65.8%
5. Siding replacement (vinyl)
Cost: $16,576
Resale: $11,315
Recoup: 68.3%
6. Entry door replacement (steel)
Cost: $2,082
Resale: $1,353
Recoup: 65.0%
7. Window replacement (vinyl)
Cost: $19,385
Resale: $13,297
Recoup: 68.6%
8. Siding replacement (fiber-cement)
Cost: $19,626
Resale: $13,618
Recoup: 69.4%
9. Window replacement (wood)
Cost: $23,219
Resale: $15,644
Recoup: 67.4%
10. Deck addition (composite)
Cost: $22,426
Resale: $14,169
Recoup: 63.2%
Surprised by that list? As you can see, not all the best home improvements, in terms of ROI, are the most expensive! Kitchen and bathroom upgardes have performed well for decades, but a new front door being such a great investment? That may come as a surprise to some!
Best Lower Cost Home Improvements for Resale
Making your home more desirable to buyers doesn't have to cost a lot of money. Take a look at these less expensive projects that nonetheless provide excellent value at resale time and are worth considering if you plan to sell your Waterloo region home in 2024.
Interior Paint Jobs
Most homes have natural wear and tear, a few dings on the walls or nail holes remaining where art used to hang. These imperfections are particularly noticeable in marketing photos and virtual tours. A new coat of paint gives your home a fresh and updated look for home shoppers.
If you are painting with an eye to selling, experts say you should stick to neutrals — gray, beige, or greige walls and white trim. Other colours that offer great ROI? Light blue for bathrooms, white for kitchens and darker blues for bedrooms.
This sounds a little boring, but from this base you can add lots of other decorative touches to create your own version of an attractive home, but you won't be stuck with paint colours that will go out of style or need to be painted over before listing your home for sale.
Curb appeal
The first thing buyers will see, both online and in person, is your home’s exterior. Whether they’re viewing your exterior photo in an online listing, driving by, or attending a private tour or open house, it’s imperative that your home makes a good first impression.
Painting your front door can have a big impact, and making the entire exterior pop with a new coat of paint can help, too. And if your front door has seen better days, we already established that any investment you make in a new one will almost certainly offer great ROI!
Smart Home Technology
41% of Generation Z buyers and 47% of millennials rate smart home technology as highly important in their home search. Smart thermostats are a popular and relatively easy addition, as are smart locks and smart, dimmable lighting.
Better Overall Lighting
Good lighting is crucial to showcasing your home’s features, especially if your home doesn’t have a lot of natural light. Upgrading your lighting is often quite easy and inexpensive, and it can make even small rooms look and feel larger.
Better lighting can also include better natural lighting. Consider switching out heavy drapes for blinds in rooms that get good natural light.
Small Bathroom Updates
You don’t need to rip out tile or add all new fixtures to give your bathroom a face-lift. In fact, 27% of sellers make improvements to the bathroom before selling, and they can be simple fixes.
Replace the vanity lights for a more updated look.
Recaulk or reglaze the tub instead of replacing it.
Upgrade fixtures with a spa ambiance in mind, like putting in a rain shower head.
Improve Your Flooring
Sprucing up flooring is another common task, taken on by 24% of sellers.
Deep clean wall-to-wall carpets.
Buff out or refinish hardwoods, especially if there are visible scratches or stains.
If your flooring needs replacement, consider herringbone parquet flooring, which the Remodelling Magazine research found could add a 5.0% premium to the sale price.
Home Improvements That Won’t Always Add Value
Not every home improvement project is guaranteed to attract more buyers or give you a good ROI, even if it’s something you enjoy while you’re still living in the home. If you’re renovating with the goal of eventually selling, you should know that the following upgrades are not always going to offer great ROI:
Swimming pools
Pools are a polarizing topic for buyers — some buyers love a home with a pool, but many others see it as a safety issue or a huge maintenance burden. If you are considering adding a pool for your own enjoyment that's great, but it will not always increase your home's value.
Luxury upgrades
It often depends on your specific neighborhood, but super high-end touches like professional-grade appliances and marble countertops may not be something buyers are willing to pay extra for. On the other hand, higher end finishes like these are often very desireable, but granite is as beloved as marble, and even
High-end landscaping
Similarly, investing in expensive landscaping and water features doesn’t always pay off, as buyers can see them as a hassle.
Minimum Repairs: What You Must Fix Before Selling Your Waterloo Region Home
Small repairs and maintenance are often needed to show buyers that you’ve taken good care of the home. These small efforts can make a big difference when it comes to how long it takes to sell your home and how much it sells for. And it can streamline the negotiation process since your buyer won’t have to request repairs as a result of their inspection.
Consider tackling these projects before taking on bigger improvements:
Replace broken mechanicals, like your HVAC system or appliances.
Remove peeling wallpaper and repaint.
Take care of weeds and overgrown landscaping.
Repair broken or leaky plumbing.
Replace cracked tiles.
Not sure what those must-do repairs are for your specific home? Your real estate agent can give you a good idea of the issues buyers are going to care about.
How to Budget for Renovations to Increase Home Value
Before researching renovations that might add the most value to your home, decide how much you can afford to spend and how you’ll pay for the renovations.
All-cash home improvements
If you can afford it, paying cash is your best option, as you’ll avoid debt and interest payments. But the drawback is that the money you spend will be tied up until you sell the home. However, for smaller improvements that are more about your enjoyment of your home, cash really is the best way to go.
Using financing for renovations
Many homeowners opt to finance their home remodeling project — especially if they’re planning on selling shortly after finishing the project — as they’ll be able to pay the loan back in full after closing.
There are a few different ways to pay for your project, but note that most lenders require that your remaining mortgage balance plus the amount you borrow total less than 90% of your home’s pre-improvement value.
Here are two common financing options:
Second mortgage
Much like your first mortgage, a second mortgage allows you to borrow a fixed amount of cash, in a lump sum, with a fixed interest rate.
Home equity line of credit (HELOC)
A HELOC operates like a revolving credit line, secured by the equity in your home. You borrow what you need as you go, but you’re borrowing with a variable interest rate, so costs can go up (or down) over time.
What if I can’t afford home improvements before listing?
If your budget - or time constraints - won’t allow you to complete any repairs or improvements before listing your Waterloo Region home for sale, you have three options:
Hope: You could hope that buyers won't notice things that need to be repaired or updated. This is, we should tell you, HIGHLY unlikely.
Sell as-is: When you sell as-is, you make it clear to buyers that you won’t be making any repairs before closing. You’ll want to adjust your listing price to accommodate for that fact. Note that buyers may try to negotiate the price even lower, especially if the property is in bad shape.
Offer a credit at closing: If your buyer’s inspection uncovers any issues in the home, you can offer a credit to the buyer that will allow them to make the repairs after closing. However, often, the credit the buyer requests ends up being higher than what the cost would have been if you had completed the repairs ahead of time.
Unsure if your home is ready for the Waterloo Region market? Team Pinto's comprehensive property evaluation can identify areas for improvement and provide valuable insights to boost your home's selling potential. Contact us to get started today!