We Kiwis are known to love a bit of DIY around the home and many will jump at the chance to pick up a paint brush or hammer and nail.
But when it comes to adding value and then selling property, it can be hard to know the balance between renovation rewards and risk.
Renovating property to sell can be tricky, because although upgrading a bathroom or kitchen can add a more modern quality to a house on the market, keen renovators who fail to do their homework could face problems of poor budgeting and over-spending.
Mark Trafford is a co-director of Maintain To Profit, a company that helps more than 200 home owners get their properties ready for sale every year.
He says that although it’s important to spruce up both the inside and outside of a home, too many people go overboard and end up over budget.
“Our firm belief is that many homeowners either can’t afford to sell or upgrade at present, or simply don’t want to sell their house at what they see as a lesser price in the current market, which has flattened out this year” he says.
“We look at all renovations from a return-on-investment scenario for our clients however it can vary according to each project. Our tip: set a budget, be realistic and have a timeframe.”
When it comes to basic renovations, which is all most people need to make their house open-home worthy, remodelling the kitchen or bathroom should do the trick. A little work can equal a lot of street appeal.
“Often it’s not necessary to replace the entire kitchen or bathroom. You can paint the kitchen units, replace the cupboard handles, update tapware cost-effectively. Spend money on street appeal, paint the fence, wash the house and put some cheap plants in the garden.
“None of this will cost a lot but it will give potential buyers a good first impression and get them in the door.”
Jane Eyles-Bennett, director of Hotspace consultants with over 17 years experience in designing, property investments and renovations, says it is important to work out the feasibility of any sort of renovation before starting.
Eyles-Bennet, who is based in Australia, suggests spending no more than 5 – 7 per cent of a property’s pre-renovation value on doing it up.
For example, the owner of a $400,000 home should try to spend between $20,000 and $28,000 or less on renovations.
“Do a reverse feasibility study on your proposed renovation.” she said. “Take your potential sales price and subtract your expenses and expected profit to work out your renovation budget. Or subtract renovation costs, if known, and expenses from your potential sale price to work out your expected profit.”
This way, she says, homeowners know exactly whether it’s worth the risk to go ahead with renovations.
The next step is planning budgets, trying not to get too emotional over changes, and keeping to that budget. The trick is renovation in such a way that it offers value to a buyer.
Over-spending in a way that doesn’t appeal to buyers will only entice them to buy another house.
“So often I see people renovating parts of their property that simply don’t need it because they saw this show or that magazine article of someone else’s property. Or they(use colours, materials and products that are not appropriate.
“If your property has what they want at a fair price, then your property will be the one they buy.”
Know your Market
• Work out your target market and what they place value on based on the area your property is located in and the needs of the people who I’ve there.( i.e. students, retirees, young families.)
• Find out what the best house on your street would sell for to guide you in figuring out how much you should spend on renovations.
• Stick to your budget: you should be able to justify everything you do. Don’t make it up as you go along and don’t add on a detail outside your budget because it “looks nice”
• Know your limits: Don’t do any electrical or plumbing work yourself if you can’t, know when to source help form professional contractors and when you will need permits.
Mark Trafford Director “Maintain To Profit”