Posted by: Karim Ali
Coffee with Karim
Renovations That Don’t Pay You Back — Especially in Today’s Market
There’s a fairly common assumption that if you spend money on your home before listing it, the market will reimburse you for that effort.
Sometimes it does.
But more often, especially in a balanced Ottawa market, it doesn’t work the way people expect.
Buyers are not looking at what you spent. They are looking at what comparable homes sold for. They are comparing your house to the one down the street that closed last month, not to your renovation invoices. And in a market where homes are selling closer to list price and buyers have time to compare options, over-improvement becomes easier to spot.
The Renovation Assumption
I’ve seen sellers put significant money into their homes just before listing because they felt it would help maximize price. In one case, a basement was professionally finished for roughly $100,000. It was beautifully done. Quality materials. Clean workmanship.
It did not add $100,000 in market value.
It added something, certainly. But not enough to justify the spend at that level. The materials and scope were simply too ambitious for the surrounding neighbourhood and buyer expectations. Had the same basement been finished more modestly, the return likely would have been stronger relative to the investment.
That is usually where things go wrong. It is not that renovating is inherently bad. It is that overspending relative to the ceiling price of the area narrows your margin quickly.
Full Kitchen and Bathroom Guts: High Risk, Thin Margin
Full kitchen remodels and bathroom gut jobs are the most common pre-sale renovation plays.
And they are also some of the riskiest.
If you are in a mid-tier neighbourhood and install a luxury kitchen with high-end custom cabinetry and top-of-the-line appliances, you may end up owning the nicest kitchen on the street. That does not automatically mean the market will pay you a premium for it.
Buyers care about condition and functionality first. A clean, updated kitchen with good lighting and neutral finishes can absolutely help a home show better. But once you move into designer-level finishes that exceed the area’s typical price range, you are relying on a buyer who is willing to stretch beyond comparable sales.
That buyer does not always appear.
The same logic applies to full bathroom renovations. Refreshing worn or dated bathrooms makes sense. Spending aggressively on custom tile layouts and boutique fixtures often does not translate dollar for dollar.
Basement Finishing: The Most Overestimated Return
Basements are interesting because they add usable space, and usable space feels valuable. But below-grade square footage does not carry the same weight in appraisals as above-grade living area.
In my experience, the risk comes when sellers hire out a full premium basement build just before selling. By the time it is done properly and to a high standard, the cost is substantial. Buyers will appreciate the extra space, but they still anchor their offers to what comparable homes sold for.
If a seller is capable of finishing a basement themselves at a reasonable cost using practical materials, the equation changes. The risk is lower. But hiring out a high-end build right before listing can easily compress or eliminate profit.
Condos: The Building Matters More Than the Fixtures
Condo renovations carry a different dynamic.
In a condominium, buyers are buying the building and the location as much as the unit. Luxury finishes inside a unit cannot fully compensate for weak financials or dated common elements.
High-end appliances, custom built-ins, designer lighting, and premium fixtures often look great. They make the unit feel elevated. But in older buildings or buildings with modest amenities, buyers may not pay a meaningful premium for those upgrades. They may appreciate them, but still price the unit in line with similar units in the same building.
In that environment, overspending on finishes is easy to do and hard to recover.
Freeholds: Where Over-Improvement Happens Quietly
Freehold properties present their own traps.
Luxury kitchens in otherwise average neighbourhoods are one. So are extensive backyard landscaping projects, particularly pools. In Ottawa, pools are usable for a limited portion of the year and come with ongoing maintenance. A meaningful percentage of buyers actually prefer not to inherit one.
The installation cost can be high. The resale bump is often modest.
Converting a four-bedroom home into a large three-bedroom layout is another example. It may improve the space for the current owner, but it narrows the buyer pool when it comes time to sell. Families shopping by bedroom count may not even click on the listing.
These are not mistakes in lifestyle terms. They are simply not guaranteed investments.
Renovations That Usually Make Sense
Smaller, lower-risk updates tend to perform more consistently.
Neutral paint. Improved lighting. Replacing flooring that is visibly worn or dated. Addressing obvious maintenance items. Updating appliances that look tired or are clearly at the end of their life.
These are not glamorous improvements. They do not make for dramatic before-and-after photos. What they do is remove objections.
Buyers respond well to homes that feel clean, bright, and cared for. That baseline matters more than most high-concept upgrades.
Pricing Versus Renovating
If I had to choose between a heavy renovation and precise pricing, I would take pricing.
Renovating before selling is capital at risk. You may get it back. You may not. Pricing correctly relative to comparable sales and current demand is far more powerful in a balanced market.
A well-priced home that feels clean and well maintained often performs better than an over-improved home that is testing the ceiling of its neighbourhood.
That does not mean never renovate. It means understand where your market cap sits before you start writing cheques.
Because the market rewards alignment. It does not reimburse effort.
609
120