If your property needs repair or you’re considering a renovation to get it ready for sale, there are a few things you should consider first. Although well-planned, cost-effective renovations can add value to a home, there is always the risk of over-capitalizing. That’s why it pays to consider the types of renovations that add value and appeal to potential buyers. So, when you’re looking to sell, when shouldn’t you renovate?
Check your margins
If your property isn’t in desperate need of repair and you’re confident you have a decent amount of existing equity, renovations may not be necessary. A general rule of thumb when it comes to renovating for profit is to spend no more than 10% of the property’s value on the alterations. So, the first step would be have an up-to-date professional valuation of your property. The next, would be to work out a budget and buffer in case of unforeseen additional expenses. Using the 10% rule, this means a home valued at $500,000 would have a total renovation budget of $50,000. Any more than this, and you risk over-capitalizing.
Do you need a quick sale?
Most renovations take time to plan and budget for, as well as to be completed. So, if you’re looking to sell soon, they may not be possible. Remember too, that renovations often go over budget and can take longer than anticipated so factor this into your decision.
Who are you renovating for?
Some renovations appeal to most buyers, such as a kitchen or bathroom upgrade, but others are personal to your taste and won’t appeal to the largest number of potential buyers.
Who are you selling to?
What is the demographic of your property’s neighbourhood? Mostly singles and couples? Mostly retirees or families? Finding out who the neighbourhood is likely to attract will help you determine suitable renovations. For instance, if your local market is likely to attract families, think carefully before adding stylish but potentially hazardous features. Or if your potential buyer is most likely an investor, keep renovations to a minimum as they will almost certainly have their own plans and your changes may add no value to them at all.
Ask if you’re unsure
Ask your Realtor their opinion on the property and the type of buyer it is likely to attract, what similar homes in similar condition are selling for and any renovations they would recommend. You may be surprised,if your home isn’t in need of massive renovations your Realtor will tell you and you may save yourself a lot of hassle,time and money.