Renovate or relocate?
Should you stay or should you go? The experts weigh in and
offer their best advice on renovating versus relocating.
What the real estate agent said
Rhonda Barresi of Gallo Real Estate in Stouffville, Ont., agrees with Jim that a basement renovation doesn’t pay back. “A basement is a great selling feature, but it doesn’t make the house worth a lot more,” she says. What does? “Location, location, location,” says Rhonda. “New kitchens, bathrooms and windows are good, too.”
According to the Canada Mortgage and Housing Corporation, expect to make back only 50 per cent of your initial investment by finishing a basement — a kitchen reno returns 68 to 73 per cent. Rhonda also warns Mark and Karen that a basement reno may price their house out of the market by making it worth more than what houses in their neighbourhood sell for. She estimates that the Podborski house is worth about $345,000, a big jump from what the couple paid 10 years ago, thanks to their kitchen reno and the hot real estate market.
If they decide to move, Rhonda says they should expect to pay about four to six per cent ($13,800 to $20,700) in real estate commissions, land-transfer taxes, legal fees, moving costs and utility hook-ups. She thinks Mark and Karen should take the profit they would make from the sale, and take advantage of low mortgage rates and buy a bigger house with a finished basement a little further from the city.
The final decision
After finding out how much a basement reno would cost and knowing that they wouldn’t get all that money back, Mark and Karen decided to move. Happily, their house sold quickly for more than the $345,000 they were asking.
“The bank wanted to keep our business, so it gave us a penalty-free discharge on our old mortgage and approved a new one for $30,000 more at a substantially lower rate, so our payments barely went up,” says Mark. Karen adds, “The new house is much bigger than our old one but was only a few thousand dollars more because it’s outside the city.”
So even though their $20,000 got eaten up in selling and moving costs, the extra money borrowed for the mortgage allowed the couple some cushion in case the new house needs unforeseen maintenance work. “At least with the move, the chaos will settle down in two or three weeks instead of months of messy renovating,” says Karen. “Plus our new house is closer to parks and schools for Eve.”
Real basement reno costs
• Blueprints $3,000
• Bathroom (minimum) $8,000
• Walls (ready to paint) 1 sq. ft. @ $3.50 x 500 $1,750
• Fix uneven floor $500
• Pot lights 10 @ $140 $1,400
• Radiators 3 @ $750 $2,250
• Windows 3 @ $470 $1,410
• Carpeting 1 sq. ft. @ $2.20 x 500 $1,100
• 10% extra for unforeseen changes $1,941
NOTE: The total doesn’t include the option of lowering the basement floor. That would add anywhere from $15,000 to $30,000 — well beyond Mark and Karen’s budget.
For help deciding whether or not the renovation you’re planning will pay off, check out cmhc.ca . Many publications (some free and some for nominal fees) are available to order, but there’s also a great Before You Renovate guide posted online to get you started in the planning process.
From Style at Home