Should I Renovate My House Before Selling? What’s my Profit Potential?

Several years ago, I staged a stunning townhouse where the homeowner had spent a significant amount of money upgrading the kitchen before she moved in. Granite countertops, floor to ceiling cabinets, stainless steel appliances, and a chandelier in the adjacent dining room that was absolutely stunning.

Around the same time I staged another home that had a gorgeous en-suite bathroom in the master bedroom.  Beautiful tiles, nice new vanity, great shower including an expensive trendy rain shower head.

In both situations, the renovations were stunning! Potential buyers were wowed when they walked into these two rooms. But did they recoup their renovation dollars or did they overspend for their neighborhood?

In a slower real estate market, its imperative that you closely watch every dollar that you put into a renovation or upgrades, in order to be sure that you will get the value out of your home when you’re selling. With some renovations and/or repairs, you will increase the amount of money you will receive for your home. In other cases, like repairs, in a slow real estate market it could be the difference between selling your house or having it sit for months on the market unsold.

Do you always recoup renovation dollars?

Watching all the renovations shows on TV makes you believe that you will always recoup your renovation dollars.  Especially with kitchen and bathroom renovations.  They always increase the value of your home.  Right?

The challenge in both situations was that both of the homeowners had created amazing spaces but they both OVER spent and OVER renovated for their neighborhood.

The townhouse with the newly renovated high end kitchen was absolutely stunning with all high-end finishes. It was very appropriate for a single family home in an upscale neighborhood.  The challenge however,  was the home was located in a mid-range neighborhood for town homes.

Unfortunately, in both situations, the cost of the renovations were higher than what the norm was for their neighborhood. In both situations, they had overspent on their renovation for their respective neighborhoods.  The result?  Both homeowners didn’t recoup all of their renovation costs which left them very frustrated & discouraged.

Know Your Neighborhood!!!

As a Designer, Stager & Real Estate Investor, I quite often get asked by friends, neighbors and anyone else who knows what I do for a living if they should put in hardwood flooring, do a bathroom renovation, and/or a kitchen renovation to sell their home.  The first question I ask them is what is the norm in their neighborhood! Would they recoup the costs of those renovations for their neighborhood? Quite often the answer is, they don’t know.

There are many factors to take into consideration when you are renovating or upgrading a feature in your home.  Where do you live?  What kind of neighborhood do you live in?  Do you live in a trendy and up & coming area where there are a lot of renovations going on?  Or do you live in an area where there are a lot of houses for sale?  Or somewhere in-between.

Do you live in a neighborhood which is considered a starter home neighborhood?  A family neighborhood or a high-end luxurious neighborhood?  What’s the average price going for homes in your neighborhood?  How long does it typically take for a home to sell in your area. Or in real estate terms, the average days on market (DOM). Are you in an older neighborhood where they’re starting to tear down smaller or older homes and using the lot to build bigger & more contemporary homes?

Walk and drive around your neighborhood.  See what type of renovations people are doing AND more importantly, what renovations are they NOT doing in your area.  For example, it’s risky being the first house to spend thousands of dollars changing the front of your house from faux stone to real stone when no one has done it yet.  In some neighborhoods, you will start a trend and add value to your home and eventually increase the prices in your neighborhood.  But in other neighborhoods, you will not recoup those renovation dollars when you want to sell.  And can you afford the risk of starting a trend in your neighborhood? If you’re a real estate investor, probably.  If you’re homeowner looking for your next house, maybe that’s a route you don’t want to go down.

About five years ago, when the real estate market was hopping, I was getting our house ready to sell.  We were painting EVERY. SQUARE. INCH. of the house and installed hardwood floors on the ENTIRE second floor to match the first floor. It was a hardwood floor neighborhood. To my surprise, the house next door went up for sale BEFORE we were ready to list! Yikes!!!  The ideal situation is to list your house first before any other houses in the neighborhood go on the market.

So I did what any homeowner would do. LOL  I went to their Open House on the weekend to check out my competition!!! When I went to the Open House, I was shocked.  There was too much furniture in every room making the rooms appear small.  They did alot of entertaining so they needed the additional seating for living in their home but not for selling.  There were numerous personal pictures & items that made you feel you were intruding into someone’s space. Every room was painted a different DARK color!!! Needless to say, I was quite relieved after I went through the house knowing that my house showed 1000 times better than my competition!!!

Check out what your competition is doing in your neighborhood.  It’s important to know what renovations homeowners are doing in your area, AND equally as important, what renovations your neighbors are NOT doing.  Do your research for likely your biggest asset that you own!

When you’re getting your house ready to sell, and if you’re serious about making the most money as you can for your house, it’s important to know what renovations and upgrades that homeowners are doing in your neighborhood.  It’s also equally as important is what they are NOT doing as well.  Check out your neighborhood but also nearby neighborhoods in your price range that could be considered your competition to potential buyers.  You need to check out as many as you can to get a good sample of what’s happening in your neighborhood AKA your competition! Start this process as early as possible when you’re thinking of getting your house ready to sell! Knowledge is power!

In a slower real estate market, its easy to overspend on renovations, and not earn the money that you put into the house. You need to look at your profit potential to see if you should or should not renovate your house to sell, what exactly should you renovate, and what are some repairs that you need to do in order to remain competitive to your competition so that you would get an offer.

Spend Less Dollars Than Your Profit Potential

What is profit potential?

The profit potential is what the new value of your home is after renovations.  For example, one home renovation show on HGTV showed a family who spent $100,000 on their home renovation.  They increased the value of their home by $120,000 by doing the renovation.  So their profit potential in this case was $20,000.  That’s alot of work for a small amount of return on your dollar.  If you’re doing the renovation to live in and enjoy the home, then it would be worth it.  BUT if you’re doing the renovation solely to increase the value of your home to sell, then its alot of work for very little profit. Most “house flippers” would consider that a lost for the effort put in to earn that $20,000. In my opinion, they either over renovated or they didn’t do the renovation that would have best benefited them.

Making sure you spend less dollars than your profit potential is key when considering a major upgrade to your home or doing a renovation with the purpose of recouping that money when you sell your house. Breaking this rule will make you disappointed and frustrated. Following this rule will make you excited with the new value of your home after your renovation.

The best way to analyze whether you should do a certain renovation or not is to assess what your house would currently sell in its current state with NO renovations or repairs done. Then assess, from a realtor or from your research on zillow, realtor or open houses, what your house would sell for with those renovations completed. The difference between those two prices will determine whether you should do a certain renovation or renovations or not. If the renovations are going to cost you $100,000 to complete for example, but you will only earn $60,000 more from the sale of your home, you will loose $40,000 on those renovations so its not doable to do them. You can then play with the numbers and look at what would the difference would be if you painted the whole house, for example, or redid the floors or a bathroom. Run through each scenario and make sure the numbers make sense before you do the renovation. If you’re not sure, bring in a realtor or a real estate investor you trust, to help you run through the numbers. It’s always good to get two or three different opinions.

Check out your competition online on Zillow and Realtor

Checking frequently on Zillow or Realtor can give you a good feel for what renovations are being done and not being done. It’s not quite the same as going to open houses where you can peer through every nook and cranny to see what the homeowners have done and what they have NOT done to their home.  It’s second best to open houses but it can also give you a good overview.  Start this process well before you have your home listed for sale!

When I ask clients if they’ve gone to their neighbor’s Open House and checked out their competition, they look at me in shock and horror! It’s surprising how many people are reluctant to go to open houses in their neighborhood. They’re afraid their neighbor will think they are nosey. But why would you NOT do important research for probably the most important asset you will own in your life – your home?

YOU need to go to Open Houses In Your Area

open house sign

When I ask clients if they’ve gone to their neighbor’s Open House and checked out their competition, they look at me in shock and horror! It’s surprising how many people are reluctant to go to open houses in their neighborhood. They’re afraid their neighbor will think they are nosey. But why would you NOT do important research for probably the most important asset you will own in your life – your home?

Going to open houses in your neighborhood, or searching the real estate listing online, will give you a better idea of what renovations your neighbors are doing, and how much they are asking for their home.  Don’t just go to one or two because the one or two that you visit may have over renovated or under renovated their home.  You may not get the full story. It’s important to go to other areas near by in your price range that potential buyers may also consider. Once the home sells, be sure to find out how much they sold their home for.  If you don’t want to ask your neighbor, the agent who sold the house would be happy to tell you.

Sadly, my neighbor lost $80,000 when they sold their home!

Sadly, my neighbor, lost $80,000 when they sold their home because they did not paint or stage their home.  Our two houses were very comparable in size, features and of course, location.  There was NOT a $80,000 difference because of features or size, but it came down to how unfavorably their house showed compared to mine. In fact, my neighbor’s house was a bigger model AND had a bigger & better backyard. Their house should have sold for more money than mine did! Don’t let this happen to you!  Don’t let money unnecessarily slip away from your fingers due to not getting your house ready to sell. You need hold unto the wonderful memories you made in the home and realize that its no longer your home as you knew it but your biggest asset that will help you achieve your financial goals and dreams.

Don’t “Under” Renovate For Your Area

I walked through a home where the home owner had just installed laminate flooring in a hardwood floor neighborhood.  The floors were beautiful but they had definitely under renovated for their area.  They would definitely be able to recoup the renovation costs plus more in their area if they had installed hardwood.   In this case,  the buyer will most likely take the dollars off their offer, rip up the newly installed laminate and install hardwood flooring when they move in.

One home for sale was a beautiful 4 season home situated right on a lake.  The property was in the $1- 2 million + price range.  The home owner had completely renovated the kitchen which was gorgeous. However, for some reason, probably financial, the homeowner installed laminate counters instead of granite or stone.  Buyers in this price range, with the location and size of the home, want and expect higher end finishings.

 If you don’t have the money to do the proper renovation that your neighborhood commands, then don’t do it! Potential buyers will either just walk away from your home because they don’t want to do the work, OR they will take the money needed to do the upgrade off the price that they offer you. When there are alot of houses to choose from, most buyers will move on to the next listing.

Read: Top 5 Inexpensive Renovations to Sell Your House

Do you need help staging your house?

I help busy homeowners, just like you, to style their house to make it a stunning retreat, where they can live and enjoy their home. I help homeowners, make money beyond their wildest expectations from the sale of their house by guiding them when they’re getting their house ready to sell.

You’re getting your house ready to sell. You know you need to declutter and get rid of some items and furniture but you’re not sure what should stay for staging, or what should go.  You need help on furniture arrangements, what you need to repair, and guidance on what paint color to choose and how to make your curb appeal show stopping.

Check out my online staging consults here


Hi! I’m Debi Collinson. Designer. Color Consultant & Real Estate Investor. 

I grew up looking at blue prints, going on construction sites and helping my dad, an Engineer|General Contractor|Co-Owner of a Design|Build|Engineering firm pick out paint colors for his buildings. Since 2006, I have been styling & staging hundreds of homes to make them look like they belong in a magazine page whether the client is styling to stay or staging to sell. 

In my spare time, LOL, I buy “fixer uppers” to fix up & either sell for a healthy profit or to rent. I’m currently looking for my 10th “fixer upper.” Sign up to receive my e-mails of how to make your home stunning, how to sell your house for top dollar AND how to become financially independent one fixer upper at a time! Read my full story including my design credentials here.

Similar Posts


Leave a Reply

Your email address will not be published. Required fields are marked *