SHOULD YOU RENOVATE YOUR PROPERTY BEFORE YOUR SELL?
Category Advice
But while some factors like renovating, extending, installing solar panels and even repainting your home may seem like a good idea now, it could actually impact negatively on a potential sale.
The biggest risk in renovating or extending a property you are about to list is that you will overcapitalise and make the property uncompetitive in a specific area.
Cautions against doing the following:
1. Building on and renovating
The biggest risk in renovating or extending a property you are about to list is that you will overcapitalise and make the property uncompetitive in a specific area.
Before undertaking any renovations or extensions it is crucial to first determine the price thresholds of the area you want to sell in.
See what homes in your street or complex have recently sold for.
The cost of renovations and extensions add up and by the time you list your property you may need to sell it for substantially higher in order to cover the renovation costs.
By doing this, some buyers possibly won't even see your listing on the property portals as the home could be priced out of the area's price range completely.
If, however, "renovations and extensions" seems to be a seller's trend in your area, it could be to your detriment not to do the same.
You should determine what sort of selling prices properties that have been extended and renovated fetch. Also, are these selling prices significantly higher that other property prices in the area, or is it minor?
If you do need to renovate, an important factor is to keep all costs to a minimum and to realise that good planning and using the right contractors can be vital in achieving your end goal.
The following tips can be considered to renovate on a budget:
- Cut back on contractor's costs wherever possible by DIY, but leave the tricky stuff to the experts.
- Don't make changes to any of the water points as this can cause plumbing issues for yourself and for future owners.
- Installing skylights are much more affordable than breaking holes in the wall to fit new windows.
- Try to salvage walls and floors before you consider replacing them.
- Consider whether the planned renovations are going to be expensive to maintain in the long run.
- The most important rooms to renovate are probably the kitchen and bathrooms.
- Always keep a record of your expenditure as this can be set off against any capital gain made at the time of resale which exceeds the exemption amount, thus reducing your potential tax liability at the time.
2. Installing solar panels with the idea that they will increase the value of your home
While there are many benefits of 'going green', the installation of energy-saving features in South African homes is quite expensive and it doesn't seem to have a significant effect on resale value yet.
Energy-saving features are not common enough to have a standard when it comes to increasing your home's resale value. That being said, they are certainly an attractive feature to have, and in some areas a home with energy-saving features is positioned more favourably with buyers than a similar home without it.
3. General
It is also wise to repaint homes using neutral colours before listing, and if a sale is subject to certain conditions, it is crucial that the seller liaises with the buyer regarding carpet or tile choices and colour of paint.
Author: Extracts - Property 24
