Question: My partner and I are looking to sell our home in Melbourne, which we bought six years ago for around $550,000. Since purchasing the property, our area has experienced particularly strong growth in housing prices so we are expecting to sell the house for more than what we originally paid. We are, however, tossing up whether to renovate the property before putting it on the market as we’re concerned the costs of renovating may outweigh the value it adds.
Is renovating really worth our time financially, and how much value is it likely to add to the property? How much should we be looking to spend on changes and what kinds of changes should we make to get the highest price possible?
Answer: You have highlighted one of the biggest traps when renovating which is over capitalisation. If you spend money and only increase the property by the same amount, then you have wasted your time and effort.
To give yourself a starting point, I would suggest that you firstly call in a couple of agents to give you a market appraisal of what they think your property would sell for in its current condition. Check out properties for yourself by attending some open for inspections and auctions of similar properties in the same suburb. Try to look at both renovated and un-renovated properties and take note of the asking prices. Keep watching to see which ones are selling, how long they take to sell and try to find out the selling prices.
Your aim is to work out the difference in price between an un-renovated property and renovated property. If, for example, you can see a difference of $100,000 and you can achieve this by spending say $20-$30,000, this could be a great way for you to make some extra money when selling. The advantage of renovating your own home for sale is that, being your principle place of residence (PPOR), you won’t be paying any capital gains tax.
A time plan is essential. A well-planned renovation should take between four to six weeks. Spend your money wisely by using a strict budget, and allow a 10% contingency factor for unexpected expenses. Because you are selling the house, first impressions are the most important. Make sure that you have a neat front fence, pressure wash the paths and front of the house, trim the shrubs, and plant some seasonal flowers to come into bloom as the house is put on the market. Treat the weeds in the lawn, add fertiliser and water so that the lawn will be looking at its best. If the outside of the house or trims are looking untidy, have them repainted. Consider new blinds for a fresh clean look – these are very reasonably priced.
One of the best and cheapest renovation materials is paint. If internal walls are looking tired, give them a coat of paint. Choose a neutral modern colour, or ask for help in choosing from the paint store. Buy paint in 20 litre drums for economy and paint every room the same colour. If the bathroom is dated, consider tile paint for the wall tiles, tub paint for the bathtub, some new taps and splurge on a new vanity. Bathroom items are particularly cheap from the bathroom renovation warehouses. The best colour for bathrooms is white to create a bigger and brighter look.
If kitchen cupboards are out dated, consider laminex paint for the doors. The bench top can be replaced and the splashback painted with tile paint. Depending on the budget you have allowed, there may be enough allowance for a new kitchen. These can be bought at warehouse outlets or at auction. Appliances are very reasonably priced and can be purchased as a package.
Have the carpets cleaned or replace if necessary from a discount carpet outlet. Otherwise consider polishing the boards.
Choose one item to create “wow factor” as the potential buyers walk into the home. This may be a fancy front door, a stunning vanity or an attractive water feature.
For presentation, remove as much excess clutter as possible to give the home a more spacious feel. Some fresh flowers on the day the property is open for inspection will add a nice touch.
- Answer provided by Judith Taylor, Property Women (www.propertywomen.com.au)