Sellers beware: Major renovations aren’t moneymakers

Canada geese, chickadees, cardinals and robins are in abundance on my morning drives these days, and while I understand from a couple of bird-obsessed friends that all of them may overwinter in the area, it seems like it’s been months since I’ve seen one, and that’s good enough for me — as far as I’m concerned, winter is over! Besides the birdies, we’re about to see a new crop of For Sale signs springing up on lawns everywhere. Whether you’re buying or selling, ‘tis about to be the season.

Spring is the busiest time of year in the real estate market, with prices spiking as much as 10%, and this year, it looks like the bidding wars we’ve come to expect in Toronto are spreading into the 905. Annualized home sales were up more than 20% in the ‘burbs last month, with the benchmark price of a suburban detached up nearly 15% over the year prior according to TREB. While the benchmark price for a detached in Toronto was up 10.5% year-over-year, that number jumped to more than 40% in Milton, nearly an hour’s drive away.

The spring real estate market is already moving, with prospective purchasers hoping to get a jump on spring sales in January. The bidding wars are in full bloom; one Hillsdale Avenue home sold for just over $1.5 million, more than $360,000 over asking, while in Monarch Park, the Globe reports a sale for $705,010, more than $170,000 over the $535,000 asking price. The properties were priced at substantially less than market value, with agents anticipating a bidding war (which they certainly got).

While that’s encouraging news for sellers, the expectations of buyers have changed drastically in recent years. Even a decade ago, it wouldn’t have been unusual for your agent to take you to see a home for sale while the owner chills out in the living room, surrounded by all the detritus of everyday life. These days, buyers expect to see homes that are clean and clutter free, and it doesn’t seem to matter what the price point. Even entry-level buyers don’t want to have to do much besides unpack.

Unfortunately, putting a lot of money into fixing up your home before you sell isn’t a guarantee you’ll recoup your investment. According to Remodeling magazine’s 2015 Cost vs Value Report, the average home-improvement project recoups just over 60% of its cost. We tend to think a new kitchen or a new bathroom is a slam dunk for making money at resale, but it ain’t necessarily so.

With the exception of entry door replacement, which the magazine says recoups nearly 102% of its cost, all other projects were money-losers. A bathroom addition, for example, was likely to recoup just 58% of investment; a deck, 80%; a new roof, about 71%. While a minor kitchen remodel might get you nearly 80% return, a major one will get you less than 67%. Most realtors will tell you you’re better off making small fixes, like painting, trimming hedges and repairing driveway cracks.

One of the best things you can do before your home goes up for sale is simply pack away most of what you own. This is difficult for those of us who actually live in our homes, but you should be aiming to hide or eliminate a good three-quarters of the items in your house. Clear off counters, put away out of season clothes, and pack away the tchotchkes. Buyers don’t want to see how you live — they want to imagine how they’ll live.

Whatever you’ve got planned for spring, just keep a level head — the Toronto real estate market continues to be a wild ride.