Whether to renovate or not is a common question that faces many vendors.
It is a popular way to make a property instantly appealing to buyers. But it is also important not to be too ambitious and get carried away with expensive renovations which over-capitalise your property. This means that the amount you spend on renovations is unlikely to be recouped in the selling price.
The key lies in working out your budget carefully and focusing on areas most likely to give you the best return on your investment.
Let’s take a look at some important tips in the pre-sale renovation game.
Distinguish between cosmetic work and major renovations
Your home might not need a full or even partial renovation. It’s amazing what a paint job and floorboard polish can do for the look of an older property. Whether you go for the cosmetic makeover or structural renovation depends on the time and money you have available, as well as the existing state of the property. If it’s got great bones and tired décor, attending to fresh paint, window coverings and flooring might suffice, without the risk of overcapitalising.
Is the house itself worth the spend?
Many eager home owners carry out extensive renovations on properties which simply aren’t worth it. If your tired old house sits on a large block of land in a desirable area, the high land value could well make renovations unviable. With many buyers or developers looking to demolish and rebuild, you’re unlikely to get your money back.
Make your renovation proportional to land size
Some property experts suggest that renovations carry more value and yield more return on proportionally smaller blocks of land. So spending renovation money on a shabby townhouse or older-style unit is a better use of resources than splashing out on a full-block house renovation.
Don’t DIY – unless you’re an expert
If you’re lucky enough to be or know a tradie, you’ve got a great head-start when it comes to pre-sale renovations. Pull off a quality, low-cost renovation and you stand a real chance of making some money when it’s time to sell. But beware of shoddy jobs if you’re a casual DIY’er. Your work has to stand up to a pre purchase building inspection in Sydney or elsewhere in the country. Australia’s capital cities offer plenty of property competition, so make sure your structural renovations pass muster if put to the inspection test.
Make sure you’re renovating the right areas
Kitchens and bathrooms are traditionally seen as the most profitable renovation areas, having the greatest impact on sale price.
Unfortunately, they are also the most costly, with quality fixtures and fittings racking up the bills. Consider a partial renovation which spruces up your existing rooms without the hefty cost.
It’s also worth spending on your property’s street appeal. You might have a beautifully renovated interior. If the exterior is scruffy and unappealing, however, potential buyers might never get past the front gate or might even be tempted to put in a low offer.
Will your renovations appeal to the widest possible market?
It might bore you, but beige or off-white paint and neutral tones throughout will please the greatest number of buyers.
Take a look around the neighbourhood
Is your home already in the higher price range of properties in the area? If so, renovations could make your home unaffordable for many buyers. Attend some Open for Inspections in your locale and see what features similar properties are offering before you start spending money.
Renovations are a no-no for some buyers
Some home-seekers don’t want to pay a premium for renovations they might not like anyway. They are looking for doer-uppers they can renovate to their own taste. Developers, too, are keen to snap up un-renovated properties in desirable areas. In some instances, your home might be just as desirable in its raw state, and it saves you a heap of time, money and stress.
So think carefully before you undertake renovations, and don’t get caught out!
By Darel McBride
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