Should You Renovate or Just Move?
If you wonder what it would be like to have a larger kitchen, an extra bathroom or even a main floor family room, you probably wrestle with the dilemma: "Should I renovate or just move?"
It's never easy to uproot your family and move to a new home, especially if you're settled in and comfortable where you live. This is why we are often tempted to improve our homes instead of move to something that would meet our changing needs. While it's difficult to separate emotions and memories from financial considerations, it's often helpful to step back and look at the return you get when you invest in a major renovation.
The Appraisal Institute of Canada's most recent Renovation And Home Value survey lists the 10 renovations that have the greatest financial return at resale time. In an annual poll, 200 appraisers nationwide rank renovations by their return on investment. The results are shown here - summarized as a percentage of the money spent on each renovation that a homeowner could expect to recoup when they finally move.
Average Return on Investment |
1. Kitchen |
68% |
2. Bathroom |
64% |
3. Painting |
64% |
4. Finished Basement |
50% |
5. New Furnace |
50% |
6. Family Room Addition |
49% |
7. Landscaping |
45% |
8. Extra Apartment |
42% |
9. New Windows and Doors |
39% |
10. Central Air |
38% |
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Preparing Your Home for Showing
As tired and banal as these clichés may sound to you, the reason why they are clichés is because they are true. The decision to buy a house is not solely based upon rational factors such as price, location and accessibility to services. It is also an emotional choice. It's a search for a home, a place in which one will find comfort, security and happiness, a place one would want to settle down and live in.
Emotions are set early, so it's important that minor, even typical, nuisances such as an unmowed lawn or a pile of boots by the door are looked after. As unfair as it might be to your home, after only fifteen seconds most buyers have already developed a perception of your property that will colour their feelings for the rest of the showing and perhaps dramatically affect their perceived value of the property.
Here is a list of suggestions for creating a favourable first impression: |
"Love at first sight..." |
"Cleanliness is a virtue" |
- Plant flowers, weed and edge gardens
- Mow lawn and trim hedges and shrubs
- Clean driveway and sidewalks of dirt, leaves or snow
- Water the lawn extensively, well in advance of selling
- Remove old lawn ornaments, toys and play sets
- Clean and repair rain gutters and siding
- Touch up exterior paint
- Clean out garage
- Pick up any litter
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- Make mirrors glitter and appliances sparkle
- Wash and polish all floors
- Clean and freshen bathrooms
- Clean/shampoo all carpets
- Clean all windows, walls, doors and trim
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"This place looks neat and tidy" |
"It certainly is well maintained" |
- Clear all countertops
- De-clutter all heavy traffic areas
- Store surplus furniture to reduce feeling crowded
- Put seasonal clothing into storage
- Clear halls and stairs of clutter
- Make all closets neat & tidy
(and only half-full, even if this means moving items to another storage area)
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- Touch up interior paint and paper
- Repair cracked plaster
- Tighten door knobs and cupboard latches
- Oil any squeaky doors
- Repair leaky plumbing (taps, shower heads and toilets)
- Repair seals/caulking around bathtub and sinks
- Replace burnt-out light bulbs/install brighter bulbs
- Clean furnace and humidifier
- Repair any other minor flaws
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The "PRESENTATION" |
- Turn on all lights
- Open all drapes in daytime
- Play quiet background music
- Turn on air-conditioning or light fireplace
- Keep pets outside during showings (or, better yet, at a friend's)
- Have as few people in the house as possible. If you can, be absent during any showings as potential buyers often feel awkward and rush through if they think they are inconveniencing the owner.
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Should You Sell or Buy First? - This is your dilemma!
Should you wait for the right home to come on the market before putting your current home up for sale or should you sell first and then go out and find what you want?
While there is no simple answer to this question, you will probably come to a definite decision based on your personal comfort levels with regard to the following...
SELL FIRST |
Pros: |
Cons: |
- You know exactly how much money you have from the sale of your first home and can comfortably choose your next home's price range and negotiate accordingly.
- With cash in hand you can immediately make firm offers on any property that meets your needs. If a property pops up that is perfect or extremely well priced you can be the first in the door with an offer.
- You have more negotiating power. When Sellers turn down or counter an offer that is conditional upon the sale of a home, they usually believe that the Buyer will come back with a more serious offer if and when the Buyers' home has finally sold. Sellers give much more consideration to unconditional offers since they usually realize the Buyer does have other options and may move on and pursue a different property if their final offer is rejected.
- If more than one property interests you, you can shop around, negotiate, and finally settle on the best deal.
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- If the right home is not currently on the market when you finally sell, and nothing comes up before your closing date, you may have to find alternative accommodation until something appropriate comes along.
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Questions you should ask yourself |
- Do you have reasonable options available if your closing dates do not line up and you cannot move into your new home the same day you move out of your current home?
- How would you and your family react to the stress of having to rent for an unknown period of time?
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BUY FIRST |
Pros: |
Cons: |
- If you are only interested in moving if a very specific property comes up, buying first ensures you do not miss out on the perfect opportunity.
- If a unique or underpriced property comes on the market and you do not think it will last long, snapping up the deal ensures someone else does not buy it out from under you.
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- If your current home does not sell quickly enough you may end up having to finance both homes and carry the extra debt until you do sell.
- You do not know what the final selling price of your current home will be. If your budget is tight, this could affect your financial decisions. While you can get appraisals and market evaluations of your current home's value, nothing is for sure until you actually get an offer.
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Questions you should ask yourself |
- How would you react to the stress of owning two homes at once?
- Would you have the financial reserves to do this?
- How would you feel if you were eventually forced to sell your current home at a "fire sale" price?
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CONDITIONAL OFFERS |
A third option involves making your offer to purchase conditional upon your being able to sell your current home within a specified time period. Conditional offers usually include a clause that allows the Seller to continue to market his or her property while you try to sell your home. If the Seller receives another bona fide offer, they can accept it and ask you either to remove your condition and firm up or to step aside. While conditional offers do not provide all of the advantages of the first two options, they do offer a reasonable compromise for those uncomfortable with the drawbacks associated with either selling or buying first. |
Pros: |
Cons: |
- You do not have to sell your current home until you have found and negotiated an acceptable price on your next home.
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- You have less negotiating power. Sellers sometimes turn down or counter an offer that is conditional upon the sale of a home. There is a general impression that Sellers give less consideration to conditional offers than they do to firm ones. Some Sellers feel that the Buyer will come back with a more serious offer if and when their current home has finally sold. You may end up having to pay a bit more for the house in order to get your conditional offer accepted and be first in line.
- Another purchaser may make an offer and bump your offer before you have sold your current home, putting you back at square one.
- You cannot withdraw your conditional offer until the time set out in the condition has passed. This could be frustrating if a better deal comes along and you wish to pursue it.
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Common Errors to Avoid When Selling
The selling and buying of a house can be a stressful and confusing process. Not only is it very expensive to 'learn from your mistakes' but very few people move often enough to gain the needed experience.
Although there is no substitute for doing your homework (start by asking your family and friends who have recently moved for their experiences) the following list of common pitfalls may be helpful.
- Pricing Incorrectly (too high or too low):
Make sure you determine the market value of your home correctly: If your asking price is significantly higher than what the market is currently bearing, many potential buyers looking for your style of home will view similar but lower priced homes first. Not only does this limit the pool of potential buyers but it also increases the chances that your home will sell for less than its actual value. This is due to the "discount" often associated with properties that have been on the market for a longer than average time. Buyers are often overheard asking their Agent... "What's wrong with that home? It's been for sale forever".
Alternatively, if your asking price is too low, you are literally giving away your hard-earned equity just because you did not know what the market would bear.
- Failing to "Showcase" your home:
A little work can improve the first impression of your home a thousand-fold. First impressions are lasting impressions and can dramatically affect a property's perceived value.
- Mistaking a Bank's appraisal or a new Tax Assessment as your home's actual market value:
These processes are based on general guidelines such as lot size and square footage, not the specific qualities and improvements of your home. Using either of these as a baseline could cause you to over-price or under-price your property. It requires detailed background knowledge of all recent neighbourhood sales as well as homes currently for sale in order to estimate value accurately. Ask your REALTOR for a detailed market evaluation.
- Choosing the wrong REALTOR or choosing a REALTOR for the wrong reasons:
It is critical that you have full confidence in your REALTOR's experience and abilities. You want a REALTOR who can explain the whole selling process to you, has a good feel for the market, has access to potential buyers and offers sound advice on how to improve your chances of selling. Try to avoid choosing a REALTOR on the basis of which one gives the highest estimate of your home's value. In order to achieve the best sale price within a reasonable period of time you need an accurate indication of what the true market value of your property is. Knowing this allows you to properly price your home, thus maximizing your chances of selling and allowing you to make your future plans with the sure knowledge that your goals can be attained.
- Failing to take current market conditions/trends into account:
Is it a Buyer's market, a Seller's market, a Balanced market? What do future trends look like? Ask your REALTOR for a full analysis.
- Not taking advantage of market fluctuations: The Big Picture...
Moving up in a market downturn? If your $150,000 home has dropped 10% in value, so has your $300,000 dream home. Yes, you lose $15,000 on your current home, but you save $30,000 on your next purchase! Always keep in mind the big picture.
- Using "Hard Sell" during showings:
No one likes being pressured. As well, buyers might wonder why you are so anxious to sell. Let your home speak for itself.
- Mistaking "Lookers" for "Buyers":
Many people who look at homes for sale may just be getting a feel for the market, seeing how others 'showcase' their homes, or even just looking for decorating ideas. Your REALTOR deals with these situations on a full-time basis and has the experience needed to separate the "Lookers" from the actual "Buyers".
- Relying too heavily on advice from the Buyer's REALTOR:
The interests of buyers and sellers are often opposing. In an agency relationship it is very difficult for one REALTOR to look out for the interests of both the buyer and the seller. You want to make sure you are familiar with Real Estate relationships and the difference between being a client or a customer before accepting advice from an agent or entering into any formal relationship with an agent.
- Limiting the marketing and exposure of your property:
Part of what a good REALTOR does is to ensure that your property is showcased and marketed in the best and most productive manner possible. Not allowing a "For Sale" sign on the front yard or limiting viewing times can dramatically reduce the number of prospective purchasers seeing your home and have a serious impact on your bottom line.
Moving can be such a stressful undertaking that we often get distracted and forget to do the little things like forward our mail or change our driver's license address. Here are some helpful reminder checklist of things you may want to do.
Household Reminders |
Packing and Moving |
- Disconnect and settle accounts with utilities, cable and phone services.
- Order utilities to be connected at new home.
- Cancel any pre-authorized bill payments.
- Have your mail forwarded to your new address.
- Stop or forward all home deliveries, newspapers and magazines.
- Start reviewing what is worth taking and what is not. Now is the best time to clear out those closets and start anew.
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- Make special arrangements for the moving of pets or plants.
- Prepare a list of all items you want to carry to your new home (such as jewelry and other personal valuables).
- Pick up all personal items at local businesses (dry cleaning, film, storage).
- Service all appliances for the trip.
- All gas appliances must be emptied. It is illegal for movers to carry flammable liquids.
- Verify with your moving company the date, time of arrival and method of payment.
- Take inventory of all items you are moving.
- Get some cash for traveling expenses.
- Service your car thoroughly.
- Let a close friend or family member know your travel route and schedule.
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Friends and Community |
Records and Licenses |
- Investigate how to transfer your children to their new school.
- Send change of address notices to friends, family, and work.
- Collect items you have lent to friends.
- Return everything you have borrowed.
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- Obtain or transfer all medical and dental records.
- Fill all prescriptions before leaving.
- Change the address on your driver's license.
- Change all billing addresses for credit cards.
- Order cheques with your new address.
- Change address or transfer banking accounts and safety deposit boxes.
- Leave a record of any security system codes for the new owners.
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Insurance and Legal Stuff |
- Visit your lawyer. Sign all necessary papers.
- Transfer insurance to your new home, or obtain new insurance. Notify your insurance company well in advance of the move and ask to have your policy reviewed.
- Ensure your mover's insurance policies are adequate. If not, obtain your own.
- If you rent, give written notice to your landlord.
- Have all keys to your old home delivered to your REALTOR or Lawyer.
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The value of working with a Agent when selling your home
Selling your home is a complex and stressful undertaking; Getting an expert to help will save you time, money, and aggravation.
The Advantages of working with a Agent are: |
- Looking out for your best interests:
By asking a REALTOR to act on your behalf during the sale of your home, you create an Agency Relationship and become the REALTOR's client. REALTORS always owe their clients full fiduciary duties, such as loyalty, obedience, confidentiality, accountability, duty of care, and full disclosure of all pertinent facts.
- Getting the best price:
Professional marketing means top dollar and a faster sale. REALTORS spend a lot of time and energy making sure they know their local market inside and out. They know the current market value of properties in your area and are your best resource for determining and getting the best and highest price possible. All REALTORS have access to all of their agency's resources and marketing skills, ensuring that all potential buyers are quickly made aware of your home.
- Showcase your home in the best possible light:
As unfair as it might be to your home, after only fifteen seconds most buyers have already developed a perception of your property that will colour their feelings during the rest of the showing and perhaps dramatically affect how they perceive the value of the property. REALTORS can offer a great deal of information and advice on how to significantly increase your chances of obtaining the highest and best price for your home.
- Dealing only with qualified buyers:
REALTORS have access to pre-screened and pre-qualified buyers who are really serious about buying in your neighbourhood. They work full-time making these connections and are literally the best source of potential purchasers.
- Negotiation expertise:
REALTORS do many things, but one of their most important functions is to negotiate on behalf of their clients. When you sell your house, you want the best price in a reasonable amount of time. Your REALTOR's job is to facilitate this by drawing up legally binding contracts, assisting in negotiating any offers, offering advice and perspective, and if needed, acting as a mediator during any potential disputes between you and the purchaser.
- Professional experience:
A REALTOR brings to the table all of his or her knowledge, training and negotiation skills, and will explain exactly what you can expect from the buying/selling process. He or she will be able to explain your rights and obligations, help organize and strategize, and even discuss financing options.All REALTORS are members of the Canadian Real Estate Association (CREA). This organization requires all of its members to adhere to a strict Code of Ethics and Standards of Business Practice. The Code and Standards are very important because they assure that all REALTORS offer the highest level of service, honesty and integrity possible. All REALTORS are subject to constant professional monitoring that keeps them directly accountable to the individual consumers they serve. CREA also ensures that all of its members are knowledgeable and highly trained in order to better serve the public and offers ongoing education courses so that REALTORS continue to meet the highest professional standards in an ever-changing industry.
- Access to Multiple Listing Services:
REALTORS have exclusive access to the Multiple Listing Service (MLS). The MLS system is one of the most effective marketing tools available, giving all REALTORS nation-wide access to your property.
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