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I have been watching several shows including Love It or List It and it seems they always increase the value of their house when they do renovations, no matter how small. I have always heard that it is hard to get renovation money back when you sell a house. So why does the value of their houses keep going up usually twice as much as the renovation cost?

Thanks!

Hi Jalynnrm, welcome aboard!

My initial thought was to respond that it's because reality television is about the farthest thing from actual reality on the planet, IMHO.

OTOH, another, better answer might be that those are realtor estimates or projections only. They don't represent either appraisals or (even better) actual sales data.

If you review the relevant, current stats from U.S. closed sale data, you'll confirm it's extremely difficult and rare to receive any return on improvement **$ upon resale.

JMHO.

funny but that show seems to come from Canada and guess housing up there is more .But if you look most house's there are so tight together it amazes me .The only thing that will help a sale in the US is if you are in a high demand area .Updating paint colors in the house and just clean and declutter to make house look bigger .Remember cluttered kitchen cabinets and cluttered closets say a lot about space . fresh clean smell .Not fake candle smell or fake spray scent smell .Seems people notice the fake smells these days .

It is important that you separate what really happens in the US with what the TV programming says that it happens.
I cannot speak for the real estate in Canada, but in the US. unfortunately speaking we are in a very big slump regarding the housing market, and upgrades may make your home sell faster but the price is very much tied into what your area is selling for.
So far we are not improving much since 2004-06 in prices. hopefully we will in a few years. in the meantime, you don't sell unless you really have to.

Jal, Welcome to the Real Estate Boards!

A month or two ago I would probably have suggested that you would get more responses on the TV Shows Board but, since I have started watching "Love It, List It" recently, I do think your post belongs here.

The so-called increase in value is a figment of someone's imagination but it makes for a good TV show. Bottom line, the only way to increase value is through square footage and/or major renovations; cosmetic changes DO NOT increase value although they may help it sell faster than places that have not been up-dated.

Jalynnrm,

Just to clarify - I was speaking of receiving a return on your improvement **$, not merely recouping the cost of the improvement itself. (You mentioned that those reality RE programs often claim that the homeowners doubled their money.)

Again speaking of U.S. closed sale data only, IIRC, even in the go-go days before the recent RE crash, renovators often stated that homeowners would receive an 80% "return" on a kitchen. So, in other words, a kitchen update would actually cost a homeowner 20%. Like the realtor's estimated, informal value as presented on the program you mentioned, those were sales projections, too - and may have been overly optimistic.

Yes, major improvements may increase the value of your home. By how much? Depends on many factors but it's highly unlikely that you'll recoup even 100% of your costs in both good markets and bad.

My links don't work but if you're interested, let me know and I'll provide a web address for the annual study (U.S. only) that breaks closed sale data down by area of the country, specific improvements and the % of cost recovery upon sale.

Hope that helps and makes sense -

All of the above, JMHO.

This message has been edited. Last edited by: SurfNow,

The only way you may be able to get the money back on an improvement is to sell it right then ,just like anything most improvements loose value because they end up looking out dated over time or they are not the taste of the new potential buyer .I have seen that on house hunters ,lady says I don't like the color of the granite or the color of the kitchen cabinets or the floor covering ,realtor says it was just redone with in the last year ,well it is not my taste the lady says .No one has the same taste and what i like is not what others like .I look at square footage these days and what comparables go for in that neighbor hood .I don't think any one these days are ever going to get 100% back unless the home is in a hot market state that offers jobs .I can't understand those shows with realtors and designers that compare houses and all it finally comes down to is location not all the big money the people spent or the all the updates .Location and taste and square feet plus other homes on the market .

Agree, sissy. That was actually one of the many factors I was thinking of (but didn't want to take the time to post about) when I mentioned it depends on many factors, above.

Many homeowners neglect to consider their upgrades' depreciation. An improvement completed 15 years prior to a sale isn't going to yield much cost recovery, if any, even before considering that it's probably very dated. The seller already exhausted its useful life.

You're also correct about taste. Just because a seller throws in the obligatory slab of granite doesn't mean they'll automatically receive that salesperson's 80% cost recovery, especially if they selected an unusual pattern in an unpopular or non-neutral color. Even if they unload the place immediately -

It usually comes down to 2 factors - location and s.f., period. Yes, a home may sell faster with nice, tasteful upgrades but it'll sell at the same price per s.f. as other comparably sized and located properties.

JMHO.

Five years ago, when we bought this house we went to major renovations, kitchen, floors, bathrooms, additions you name it we have done it.
Well, the cosmetic renovations are now 5 years old. ie: appliances. therefore, they have depreciated. the rest of the renovations which includes the roof, re wiring gutters, painting, again they are all 5 years olders. Therefore, the depreciation is there.
The only thing that we have gained is the addition of square footage. Of course I am paying more taxes. and if I were to sell, my house would have to be compared to the ones with similar square footage, except for the rest, good luck is for my enjoymet only.

quote:

It usually comes down to 2 factors - location and s.f., period. Yes, a home may sell faster with nice, tasteful upgrades but it'll sell at the same price per s.f. as other comparably sized and located properties.

You are SO right....

It amazes me that people refuses to understand that only addition of square footage is what is going to increase your property value.

One reason for increased value of properties renovate on Love it or list it, could be because when they speak of the cost of the renovation they are only speaking of the cost of the materials. Not the labor.

Also the renovations, while not increasing sq footage do make the houses more useable, with maybe updated kitchens or bathrooms or sizes of rooms changed.

Obviously renovating properties does increase the value or we would not have had so many "flipping" type shows. Or so many "flipped" houses in different areas.

quote:

Originally posted by lady of shallot:
One reason for increased value of properties renovate on Love it or list it, could be because when they speak of the cost of the renovation they are only speaking of the cost of the materials. Not the labor.

Also the renovations, while not increasing sq footage do make the houses more useable, with maybe updated kitchens or bathrooms or sizes of rooms changed.

Obviously renovating properties does increase the value or we would not have had so many "flipping" type shows. Or so many "flipped" houses in different areas.

I

Although I recognize that having a renovated kitchen, bath etc, makes any home more attractive, When your are going to sell your home. they are going to be priced according to the square footage and the sold comps will also reflact that.
Cosmetics are great, but square footage is what prices a house.
If not ask any realtor.

If you want to increase your home value, you must
upgrade your kitchen appliances.
Modern change in bath room
Mostly use natural materiel
renew your paint
find inspiration...

This message has been edited. Last edited by: schell,

If you want to get highest and best price sell in a sellers market. Check with your local lenders or Realtors to find out if this is the case in your market.

I highly recommend doing any maintenance repairs first. Then spruce up with paint. Clean,clean then clean so more. Then take a good hard look,
call a Realtor for an opinion, as to not waste money for upgrades if the market is not responsive.

Real estate lady, you hit the nail on the head.