Should You Renovate Your Home Before Selling in 2024?

The dichotomy of selling homes, depending what type of market it is, truly befuddles many would-be home sellers. They might hear of stories from friends and family about how easy it was to sell their homes during a hot market where they would get 10 offers and 100 showings and get a truly a life-changing amount of money for their home. But then struggle in tougher markets to even get 1 showing at the property especially after renovating and preparing a home for sale in one of the most challenging markets Toronto and the GTA has ever seen in recent years.

And there goes the first lesson in real estate, never fight the market, go with the market. But with that being said, there is always deal flow happening in this busy and bustling city even in the worst of times like we’re seeing here in fall of 2023.

Here are a few things to consider when you’re thinking or looking to list yours or your family member’s home in the next 6-12 months here in the Toronto and GTA housing market.

Renovations and Repairs

When the market is booming, this answer is typically crystal clear if you value investment performance. And I know it’s a tough proposition to spend tens of thousands or even hundreds of thousands on renovations right before selling but generally, we won’t recommend it to clients if they do not have the funds or budget to do major renovations like complete overhauls.

But in a strong market with low inventory, it absolutely makes a ton of sense as long as the view is that spending the money on renovations, repairs and staging is a temporary one and that not only will you get your money back, but possibly even make some money back through bidding, competition and just overall market excitement. We’ve helped clients in the past not only get back their investment from the renovations but get back 3-4 times their investment in frothier real estate markets.

So do renovations make sense in a more challenging market to sell?

For the most part, we would still say yes because you won’t be able to achieve full market value on your property especially when compared to your competition. The problem with homes that are old, not especially taken care of or just out-dated and no longer in style is buyers become a lot more finnicky - they find and see more problems than there actually are because we deem in our minds that old = dead or dying. Sad but true. So in turn, this becomes a stronger negotiating point as a buyer to bring the price down because you are assuming more risk with an older and more dilapidated property. The conversation in negotiations becomes “if I assume the risk of buying this property then you must compensate me in some way” and usually that translates into a lower selling price.

Now this does make sense for those who just need to sell and get rid of a property and no longer have any patience, time or money to put into it and so they will simply try to get the best value that they can get given the circumstances. This is called buying the property “as is” essentially. And often times, these are terrific properties for investors, flippers or people who are just really handy and want to do the work themselves. Because putting in money, time and expertise into a property has value, it costs money and time so for someone willing to do the work, they should get some benefit or upside on their risk - am I right?

The Hybrid Approach

So if your budget isn’t in the 6-figure range say for example you can do $50,000 then maybe you can afford to do a few bathrooms, maybe some paint and possibly flooring but can’t get to the kitchen. That’s fine, do what you can and you will likely achieve some value in return. Doing something is always better than doing nothing when it comes to selling property especially during challenging market times. Because again don’t forget, the true objective here is selling the home so you can unlock funds for whatever purpose you need it for in the future and so when we talk about renovations, repairs and fixing up a property, the greater purpose is to eventually sell the home and close it.

But if you do not have the funds to do a major renovation then that’s ok too, you can contact us here at Selling Toronto RE and we will know exactly what to do with your home regardless of whether it is completed renovated or not. But of course, we do favour the side of always trying to present the property in the best light to help you achieve maximum value on one of the most important and expensive assets in your lifetime.

HomePete LySeptember 25, 20231 Comment