Renovate to Sell: Adding value vs Over-capitalisation
Renovate to Sell - couple holding a paint can and roller
When it comes time to sell many ask – what should we do before putting the home on the market? What are buyers looking for? Should I renovate before selling?
Once you decide to sell, any money you spend on the property must be treated as an investment. That means the money you spend needs to generate a profit (i.e. a greater return than the cost).
A rule of thumb is that every $1 dollar you invest should add an EXTRA $1.50 in value to the property.
Problems occur when you invest say $20,000 in work to a property, and this adds $20,000 to the final selling price. This investment returns you 0% – zero! When you consider the time, effort and risk the real return is likely to be negative!
If you are thinking about spending a large amount of money to prepare for sale it may not be worth the time, effort and risk. It may make you feel better about selling your home, but it may not make your sale more profitable.
Ask yourself, are the proposed works going to be an investment or a cost?
Another important consideration is anticipating what buyers want, because what attracts one person may repel another.
Many sellers have made the mistake of renovating in the wrong place, style or standard.
When this occurs, buyers may be unwilling to pay for features they don’t like or want.
When deciding upon renovation work it pays to consider what buyers want, rather than what you like. Speak with a few well-informed advisors for ideas on what work is prudent and necessary before going on the market. Interior designers, valuers and real estate professionals can offer valuable insights on what work will benefit the sale and what won’t.
Just remember, increasing the sale price does not necessarily mean increasing the profit.
Take your time and let commonsense guide you with the support of your trusted advisers. We’re often called upon for advice, and we’d be happy to help you too. Call us anytime on (06) 835 4321.
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Poll: Would you want an unconventional funeral?
Funerals can cost as much as $22,000 and the planning can be stressful especially at a time when loved ones are grieving. Some New Zealanders are re-imagining funerals by making their own coffin or having a relaxed ceremony at home. Would you want a less traditional funeral? Share your thoughts below.
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84.3% Yes
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13.8% No
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1.9% Other - I'll share below!
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