Home Maintenance | May 1, 2017
For most of us, buying a home is the most expensive purchase we will ever make. Considering a large chunk of our hard-earned dollars are spent mortgaging, maintaining, and personalizing a house, it is also an incredibly important investment—one that we want to manage wisely to maximize returns.
Whether you are looking to sell a home in the next six months or have a 10-year plan to boost your home’s long-term value, it’s important to know which upgrades, changes, or renovations make sense based on your goals.
The long and short of increasing your home’s value
With over 15 years’ experience in real estate serving Edmonton and surrounding areas, Jeff Lorenz, REALTOR® with the Lorenz Group, has some expert advice for those who want to maximize their home’s resale value. “The key,” explains Jeff, “is understanding the fundamental difference between changes that maximize the ‘sale-ability’ of a home versus maximizing your overall return on investment in a home.” Generally speaking, the changes you make to a home will be different if your short-term goal is to sell, compared to changes you’d make to increase long-term investment value.
Don’t give buyers a reason to negotiate the price down
In today’s market, home sellers are challenged by high inventory and a slowing rate of absorption (the rate available homes sell within a given time period—usually one month). In this market, any upgrades or improvements should be made with a view to helping your listing stand out among others, “when all else is equal, such as square footage and location,” explains Jeff.
“Don’t give a buyer a reason to negotiate you down by using certain aspects of your home against you.” For example, if you choose not to replace an outdated furnace before listing your home, a potential buyer now has the opportunity to negotiate the selling price to accommodate its replacement—often with some generous rounding up. When it comes to investing in these types of changes, “you generally don’t lose money,” says Jeff. “It’s really about providing a home that has nothing wrong with it. When you invest $7,500 in a new, efficient furnace with a good warranty package, you can expect to get it back when you sell your house.”
Maximize your home’s sale-ability
Changes that appeal to potential buyers should focus on making your home structurally sound, safe, and comfortable. Some examples include:
- Foundation repair / addressing any structural issues
- Roof repair / replacement
- New windows
- New furnace
- Hot water tank replacement
Increase ROI with major renovation projects
When it comes to investing in major modernization projects and making dramatic cosmetic improvements to a home, the stakes are much higher. If done well, the return on investment for major renovations can be excellent. On the flip side—no pun intended—the risk of a renovation project ballooning into an expensive mess can put a major dent in your bottom line. There is also the risk that design choices “can narrow the field of potential buyers,” explains Jeff. And depending on the neighbourhood, you’ll want to be mindful of the maximum price a home—regardless of upgrades and finishes—can command in the area.
Having said that, for homeowners who aren’t afraid to put a little sweat equity into a few key renovation projects and have the know-how to do a good job, the investment can certainly pay off. Some of the top renovation projects with the best return on investment include:
- New interior and/or exterior paint
- Updated flooring
- Upgraded kitchen
- Modern bathrooms
Expert advice is always your best bet
When facing choices with major financial implications, such as buying a home or investing in major household upgrades like a new roof or a new heating system, one of the best ways to make an informed decision is to consult a reputable, trustworthy expert. If you would like additional information on the Edmonton real estate market or tips on selling a home, connect with Jeff Lorenz from the Lorenz Team. And if you’ve been thinking about investing in an updated furnace to boost your home’s value—either to enjoy yourself or to help seal the deal on a quick, profitable sale—the team at First Call is here to answer any questions you may have.