As Realtors with over 35 years of combined experience, we are often asked to share advice with prospective buyers and sellers. Below are three articles we personally prepared for leading Canadian print publications, followed by some quick stats we've researched concerning return on home renovations. For personalized questions or consultations, please feel free to contact us at any time at firstname.lastname@example.org, or page our office at 416 739 7200, and ask for Ian or Sarah! We look forward to being in touch!
The Real Estate Transaction: It’s Not Just Dollars and Cents
One of the first things they teach you in Microeconomics 101 is the concept of “opportunity cost.” The great transcendentalist philosopher Henry David Thoreau, in his classic memoir, Walden, expressed this idea quite concisely: “the price of anything,” he wrote, “is the amount of life that you exchange for it.” Thoreau was challenging his readers to recognize that transactions are about more than money. Every deal involves dozens of intangibles which significantly affect its value as well.
This is especially true with regards to the housing market. For instance, you may have heard the old adage that real estate is all about “location, location, location.” That’s because location isn’t something you can purchase, in the conventional sense of the term: you can pay somebody to upgrade your light fixtures, or to repaint your kitchen, but no amount of money will buy you the ability to move your home closer to the subway station or your community centre. So even though two properties might have cost the same to build, the one that’s in the neighborhood you’re looking to enter into is probably going to be worth much more to you.
Besides location, there are many other “intangibles” to keep in mind when trading in real estate. Buyers and sellers need to be conscious of these intangibles heading into the negotiating process in order to ensure that they’re really getting the deal that they want; sometimes, the offer with the best price is not the offer with the highest value. Maybe you’re willing to pay more for a closing date in August as opposed to September so that your move doesn’t coincide with the start of the school year. Perhaps you’re willing to waive your right to a home inspection in return for a few thousand dollars off the purchase price. Conversely, sellers often prefer offers which are not conditional upon the buyer’s finances being approved by his or her bank; a firm deal that doesn’t carry risks of falling through at some later date provides peace of mind.
Of course, removing clauses from the contract of sale which are intended to protect your interests isn’t always advisable. An experienced Realtor who is familiar with the particulars of your case can help you determine what you can safely use as a bargaining chip and what’s too risky to trade away. Our job is to optimize the value of your transaction by making sure that you get everything that’s important to you. This means the complete package: not just the right price, but all of the “intangibles” as well!
First Impressions: It’s What’s on the Outside that Counts
A few years ago, the Appraisal Institute of Canada released research detailing which home improvements can be expected to yield the largest return on your investment when it comes time to sell. Their list included painting the walls, redoing the kitchen, upgrading the floors, and adding a family room—all interior renovations. Yet while the old saying “it’s what’s on the inside that counts” certainly applies to real estate transactions, there’s another, equally relevant expression that homeowners need to keep in mind as they think about marketing their property to the public: “you only get one chance to make a first impression.” As a seller, you want prospective buyers to fall in love with your house before they even open the door.
In industry terms, the relative attractiveness of a particular property to somebody standing on the outside is called “curb appeal.” Curb appeal is affected by a whole host of factors which homeowners too often overlook. Is your driveway cracking? Have it repaved. Is your garage door peeling? Have it repainted. Is the roof showing signs of wear and tear? Have it repaired. Could your lawn use some work? Call in a landscaper.
You also want to ensure that anybody who’s looking for your house has an easy time finding it. Exterior lighting goes a long way towards that goal, particularly at night time; if effective, it can also lend an air of sophistication to your home, which will help it stand out over all the others on the block.
The value of exuding a strong initial impression cannot be overstated. It’s the street-view that people are probably going to see first when they check out your listing on MLS or look it up on Google Earth. That’s also the picture you’ll likely use at the front of any marketing material you decide to distribute at open houses or private showings. So make it count!
All the Home’s a Stage
You may have heard that the ABCs of real estate are “location, location, location.” That’s true as far as buyers are concerned. Once it comes time to sell a house, however, location is no longer something that can be changed. Instead, homeowners should focus on the three most important factors which they can control: presentation, presentation, presentation!
Upon taking a listing, we always bring in our home stager. This is something that we recommend to anybody who wants to ensure that their property will be presented to the public professionally and attractively. A home stager will provide an initial assessment with a full written report that details the specific steps you should take to showcase your home to prospective buyers. This can mean adding a fresh coat of paint, upgrading the appliances in the kitchen, changing the tiles in the powder room, de-cluttering the family room, rearranging furniture in the basement, and more.
Many homeowners believe that their house should convey a distinct “identity.” Counterintuitively, your aim should be the exact opposite. Neutral colors, conservative finishes and minimal accessories help those who walk through your home envision it in a way that suits their personality and imagination. Remember: You don’t want your home to have “you” written all over it. You want it to show as a tabula rasa – a blank slate with which anybody can identify.
Which investments return the highest profits? See the stats
Since most homeowners operate on a tight budget, it is the Realtor’s job to help you recognize which improvements are most likely to yield the largest return on your investment. Together, your Realtor and your home stager will work with you to develop a strategy for marketing your home in the way which best accentuates its unique layout and compliments its amenities at a price point that is affordable to you.
The Appraisal Institute of Canada conducted some research to determine which home renovations yield the largest payback. The following table outlines the average potential payback per dollar spent for a number of different around-the-house projects:
AVERAGE POTENTIAL PAYBACK
Painting and décor, interior
Main floor family room addition
Furnace / heating system replacement
Keep in mind that these figures are only averages—they provide a sense of where you might want to focus, but they can also be significantly affected by factors like the type of home you’re trying to sell, where it’s located, how old it is, the state of the market, etc. Sarah and I also noticed that the survey conducted by the AIC does not include any info related to curb appeal, such as landscaping, roofing and garage.
If you’d like a detailed assessment of the current value of your home and what sort of improvements we recommend, please feel free to call at any time!