Every seller is out to secure top dollar for their property.
With DIY television shows like The Block as popular as ever, many home owners are testing their handyman skills in the hope it will help them secure a higher sale price.
But the truth is that renovation comes at a cost – physically, emotionally, and to your hip pocket.
And following over twelve months of strong gains in the housing market across several Australian capital cities, many home owners have made money through property ownership without going near a hammer and nail.
This begs the question: is the risk of over-capitalising on renovations worth it to secure a higher sale price, or are you better off not lifting a finger and marketing your property as a fixer-upper?
With this in mind, here are the questions you should ask yourself before deciding:
1. What area are you selling in?
Demand for renovated or un-renovated properties depends on the area.
As the saying goes, ‘location, location, location’; if your home is located in a prestige area or tightly held suburb, chances are it will be snapped up regardless of whether it’s updated because of the high land value. Places like Albert Park in Melbourne and Vaucluse in Sydney are classic examples.
Indeed, while you’ll always find buyers at the very top end of the market who want a property in pristine condition, others will actually prefer to purchase unrenovated properties in these areas because they offer a more affordable entry point into their ‘dream’ suburb. That’s not to say you shouldn’t renovate, just spend wisely – you’d hate to spend thousands only to learn it may have sold for a similar price in its original state.
Renovated properties work well in areas crowded with unrenovated listings because they provide a point of difference – a beautifully presented home will look much better against your competition and become the draw card that gets buyers through the door.
To know what type of market you’re selling in, look at recent auction clearance rates and average visitors at open for inspections in your area compared with other suburbs to help you determine demand. Also research other homes are on the market in your area and observe how many have been renovated to better understand your competition.
2. Who are you catering to?
The type of property you own and your target buyer market will also help determine if a make-over is necessary.
For example, first home buyers are more likely to purchase an unrenovated home as they are generally cheaper. First timers are also more likely to have the youth and enthusiasm needed to make improvements to the property when they move in. On the other hand, some second home buyers or downsizers may not have the time or energy to renovate as they age or are busy running around after kids. Typically they have a larger income and are happier to spend a bit more on a home they can move into immediately.
If you’re unsure what your key buyer market is, ask your local real estate agent. They will know the local market inside out and can provide an overview of who is buying in your location, and what type of properties they’re looking for.
3. What’s your budget?
Obviously the size of your piggy bank will impact your decision to become Tim-the-Toolman.
Even with savings set aside, renovating and decorating can be a money pit. What you think might cost $10,000 could finish at $100,000.
Create a thorough budget that takes into account all costs involved. Decide what you’d like to achieve and source quotes from at least three suppliers to obtain an accurate understanding of prices (and remember you’ll need quotes for materials and labour).
Only after you have done this can you fully comprehend how much you’ll need for the project, and more importantly, if it aligns with what you can afford.
4. Do you need it or want it?
It’s easy to get carried away with how you would like the property to look rather than focusing on what will make it sell.
If you’ve decided to renovate, put yourself in the shoes of a buyer and separate the ‘must-haves’ from the ‘nice-to-haves’.
Many agents would agree that kitchens and bathrooms can be deal breakers – if these aren’t up to scratch, buyers may be turned off.
But also remember that anything on your ‘must-have’ list needn’t cost a fortune. A fresh coat of paint, a new hand basin, mirror, fixtures or light fittings could do the trick.
Other small ‘elbow grease’ changes like neatening the garden, painting the fence and furnishing neatly could add thousands to your sale price and shouldn’t be underestimated.
Well-presented homes are in hot demand in today’s market, but renovating doesn’t always mean more profit in your pocket. The choice to renovate should be based on knowing your area, who your buyers are, what they want in a property – and how much of this you can achieve within your budget.
About Kendall Bares
At 27 years old, Kendall is a sales agent at hockingstuart Albert Park. Participating in several series of The Block, Kendall’s claim to fame was in 2014 when her team helped Steve and Chantelle take home the top prize on the Channel 9 series.