Building on our prior post, 10 Curb Appeal Improvements to Increase Sales Value, we want to identify also which types of projects, in the same studies we referenced in that article, were typically giving the worst returns on investment and should almost certainly be avoided if your plan is to sell the property in the near future.
These projects all gave back less than 60% of their cost in the studies upon selling the home. It’s easy to understand why; the improvements are great on their own for some people, but they don’t appeal to everyone that is potentially interested in purchasing your property.
- Addition of a legal suite. On the surface, this type of project could sound tempting as something that would increase the value of your home. But when you think about it a little harder the red flags should be everywhere. Allowing prospective purchasers to build-in rental income to their budget and present that to the bank will absolutely increase their purchasing power and the possible price they can offer. So why is this such a bad idea? First, this type of project can often be very expensive, requiring significant electrical and plumbing work, carpentry as well as all of the finishings. But most importantly, a lot of the possible buyers of the property will recoil at the thought of having to share the property with tenants. The “downstairs tenant” stigma is very real, and even in the most soundproofed construction it is virtually impossible to ignore the fact that you are living with someone else. Combine that with BC tenancy laws that are inordinately tenant-friendly and you could be providing someone the “opportunity” to live in a real-world nightmare. Your expensive project might scare away would-be buyers and only return a fraction of the cost. What to do instead: if you already have all the utilities hooked up for a kitchen and bathroom or they are already there and all that needs to be done is create a physical separation between main area and suite, then your calculus might be a little different. Some upgrades to the finishing of the potential area could allow you to market the property as “easily suitable” or as an added living space for a larger family, thereby increasing the potential suitors for your property rather than the opposite.
- Major kitchen and bathroom renovations. Kitchens and bathrooms are correctly identified as one of the difference-makers between higher end properties and entry level homes. But spending the kind of dough it would take to go back to the studs on either should be considered very carefully. If you’re looking for a category change in pricing, then you’re looking at considerable expense on the fixturing of these new centrepieces. Buyers of high-end properties want high-end appliances and features that are consistent with the price tag of the home. But these buyers are also going to expect the same consistency throughout the home. Your new Subzero appliances and steam shower will be heavily discounted if the bedrooms have popcorn ceilings and lamp controllers, or you haven’t upgraded the heating/cooling system. By doing kitchen/bathroom renovations of this magnitude, you’re getting dangerously close to forcing your hand into a complete renovation top to bottom, costing far more than you ever envisioned. The other reason to hesitate on this kind of project is that the types of buyers you’re looking for have very specific requirements that are difficult to meet, meaning they will have to undertake a renovation of their own to make it what they want. The end result is they will not compensate you for the cost of your project entirely and you may exclude a buyer that would consider purchasing the way it is now and doing the renovation themselves – the way they want it. What to do instead? Consider a soft remodeling of the kitchen and bathroom instead. Lower your expectations of a category change on pricing and instead shoot for the top of your current category. This might involve installing new hardwood floors, refinishing or replacing cabinet doors, new countertops and a new sink/faucet in the kitchen. In the bathroom, you might do the same while upgrading the toilet and shower in whatever ways you can. This type of project might cost you 10-20% of a total renovation yet broadens the appeal of your home to those looking for something “move-in ready” and separates it from other homes on the market.
- Major landscaping. Except in rare situations where the landscaping of the home is just completely inconsistent with the inside of the home, undertaking large scale landscaping projects will also not return on their cost at sale. Similar to the above, landscaping needs of buyers are deeply personal, so it will be difficult to hit the nail on the head with a large project perfectly matching a buyer’s needs. The new addition of a flower bed could scream high-maintenance, any money you spend on drainage will be buried alongside it, and the treehouse or playground will not appeal to anyone without young kids. What to do instead? Remove shrubery and plants unless they look great, have an arborist prune the low branches of large trees to provide more sunlight, replace your grass with new sod, and at the very least hire a landscaper to clean up the garden beds and cover with new topsoil or mulch before your listing photos are taken.
The common theme among the above 3 improvements is that they are all major expenditures. It’s not necessary to spend hundreds of thousands of dollars to get your property ready for sale. Smaller and more strategic allocations of capital to certain quarters of the property will have a better chance at providing a positive net return leaving you with no regrets, no headaches and more money in the bank when all is said and done.
Matthew Stiles is a licensed Realtor® and General Contractor with Curb Appeal Property Experts based in North Vancouver. Give him a call for a free assessment and quotation on your project and how it may affect the sale price of your property.
