If you own a property but thinking of selling, you might be wondering whether to renovate it first – or just sell it as is. This is a common dilemma - and one that I talk to people about almost every week.
There are a couple of pros and cons to renovating before you sell. Here's some food for thought, before you decide one way or another.
On the 'for' side of the renovation argument is the fact that it is better for you to add the value to the property, rather than leaving the potential profit for someone else to take advantage of. However, if you do renovate prior to selling, it does need to be a case of spending $1 to make $3 or $4 (or spend eg $20,000 to make $60,000 or $80,000 or more).
A well renovated property that is good value compared to other competing properties on the market at the same time, means you are less likely to be beaten down on price – and your property is more likely to be considered over others for sale in your suburb.
The last thing you want to do is spend too much money on your renovation and end up having to ask more for the property. If that were the case, you would have been better to leave it as it was and sell it un-renovated (and not have to go through the renovation process at all).
If you want to sell your renovated property asap, then you need to be realistic about your asking price and this is only possible when you have been smart with your renovation choices. A smart ‘sellers’ renovation is where the property:
o Looks and functions better than competing properties in the same price bracket
o Is renovated to meet to needs of the property’s target buyer audience
o Is attractive to 95% + of the buying population
o Offers excellent value in the eyes of the buyer
In many cases, a pre-sale reno will increase the value and sale price of your property significantly. Sometimes though, a reno is simply a necessity to bring it up to par with other properties on the market at the same time. Get your renovation right and it will be your property that draws buyers in as the best option for them at the time.
Buyers know they’re in a ‘buyers market’ at the moment and they will sniff out any reason to knock you down on price, so you need to offer them the sort of property they want to buy (see above bullet points). If you do this, then you will have more interest from more buyers and the price will become less and less of an issue. Research suggests that when purchasing anything, price actually comes about 5th or 6th on the list of what people consider. They are more interested in getting just what they want, than getting something cheaply.
If your property is located in an area likely to attract families and professionals, you may find that once renovated, it is more likely to sell. Professionals in particular are less inclined to want to worry about doing a renovation – and prefer to have it all done for them. This is the same with families – particularly those with younger children.
On the other hand; singles, empty nesters or families with older children may be happy to carry out a renovation of their own.
On the Con’s side of the renovation argument is the fact that in this market, people are out to hunt down a bargain. The less you spend on your property to prepare it for sale, the less you need to sell it for to recoup your costs.
If you leave your property as is, you are more in a position to sell it cheaply which is what many people are looking for. They would rather buy cheaply and then recreate the home that they want from a blank canvas. However, is it what you want? Will you get out of the sale the amount of money you need doing it this way?
The other thing to think about is that if you were to renovate, your renovation tastes may differ to that of your potential buyers. If you renovate in the wrong way (using the wrong colours, materials, fixtures and fittings), then your property may not be one that is attractive enough to have the offers flooding in. This is a big mistake and I see it often!
To decide whether you will renovate – or not – ask yourself the following questions:
o What do you want your property to sell for?
o Can you leave your property as it is to achieve this price (tip: ask 3-4 respected Real Estate agents their opinions of the expected selling price for your property)
o If you do need to upgrade your property to get the sale price you want, what do other properties around this asking price in your area look like (ie the traits of your competing properties)?
o What exactly do you need to do to your property and how much can you get away with spending to bring it on par with these other properties? (tip: Hotspace Consultants – www.hotspaceconsultants.com - can help you with this one).
o How much time have you got?
o Do you have the confidence and motivation to carry out a renovation yourself?
Beware of Real Estate agents who say NOT to renovate your property. In many cases, this is because they want your listing right now – not in a few months time. On the other hand, they may be quite right in advising that selling an un-renovated property is the better option in their area.
Do your own research about whether a renovation on your property is worthwhile for the result you want.
If you’d like help working out exactly what to do to your property renovation-wise, before you sell, then think about a Renovation Action Plan (prepared by us especially for your property) or completing our DIY Renovation System course (where we guide you through creating your own DIY Renovation Action Plan).
