Renovating Seller’s Delight or Seller’s Plight?
2 Minute Read
Should you renovate before selling?
Is there a precise answer?
The answer isn’t black or white; it lives in the grey. This is due to the concepts of minor and major renovations, which balance time against money, defining what is necessary and profitable as opposed to expensive and inefficient.
When preparing for sale, you must complete a minor renovations list. This list of non-negotiable tasks is used to ensure your home is appealing to the buyer. Minor renovations include but are not limited to a deep clean of the property, gardening to provide a presentable front and back yard, and repairs & maintenance.
Repairs and maintenance are minor renovations—a fresh coat of paint, interior shutters, flooring renewal, fixing wiring or switches. However, short term renovations are a must when selling.
The longer-term renovations are the subject of the question. To establish if the major renovations are cost-effective, it is wise to first acquire a property appraisal by a professional.
PRD Penrith provides free property appraisals, and once you have the value of your property, you can implement a more appropriate budget and use the advice provided by one of our professionals to establish which renovations suit the current market and the desired demographic.
Establishing cost-effectiveness is integral to deciding if renovating is for you. The main concern is avoiding overcapitalisation; you want to renovate to add value to your sale. For example, you want to avoid $150,000 worth of renovations and only a gain of $120,000 to the sale price.
In addition, you want to create value for time. Major renovations take time, energy, and stress, whereas a quick sale results in immediate cash for potential reinvestment.
To avoid overcapitalisation and decide the cost-effectiveness of renovating, you must first understand the current market value of your home, the surrounding area and the desired demographic with whom will be the highest chance of purchasing your property.
Discovering the current market value lets you understand what houses in your area are selling for and the difference between your property and theirs. In addition, this provides insight into what you could potentially renovate if it were decidedly cost-effective.
Similarly, understanding the buyer’s demographic allows you to gear your renovations towards those most likely to purchase your property. For example, if properties are selling for more with a renovated bathroom and kitchen, you can compare sales to estimated renovation prices and implement them into your property.
A handy way to budget your renovations once cost-effectiveness is refined is to take 5-10% of your property’s value and apply that as the budget for the renovations. If your property is worth $600,000 allow for $30,000 - $60,000 for major renovations.
Minor renovations are a must, but significant changes take research and understanding before implementing them. Consult a professional before considering renovating for sale. Avoid overcapitalisation by being aware of the current market value of your property and the buyer’s demographic.
Be prepared in a seller’s market; sell smarter with PRD Penrith.
As always, our friendly team can conduct a free, no obligation market appraisal of your property and provide you with sound advice on renovations and property maintenance. Simply get in touch by calling (02) 4732 3711. We would be more than happy to assist!
