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Is It Worth Renovating Before Selling?

New Zealand’s property market has been a hot topic lately. The market is moving at an extraordinary pace, providing homeowners looking to sell a record-setting return on their investment. With the median house price continually on the rise, homeowners are looking for the best way to optimise the selling of their homes. The increase in house prices is a double-edged sword. As the market is flooded with options at various price ranges, it can be somewhat difficult to stand out from the crowd and ensure you’re taking full advantage of this phenomenal market upswing.

While it is true that it is a seller’s market, there are modern-day conveniences that potential buyers have come to expect when purchasing a house. The market may be stacked, but if you own an older house in an area that is continually being developed, the value of your house may fall short of expectations.

A renovation before selling your house maybe your best option in optimising selling your house.

Is it worth doing up your house before selling?

Recladding Your Home Before Selling

One of the most common choices for renovating prior to selling is recladding. The “leaky home” epidemic rocked the New Zealand building industry to its core and years after the fact we are still feeling its effects ripple through the country. The huge media coverage associated with the epidemic means that the general public is educated and apprehensive about buying a home that has any cladding features that even remotely resemble that of a leaky home. The cladding of the house will be a common conversation that happens between buyers and their family and friends as the stigma has effectively rooted itself into New Zealand culture. Coupling this with banks being less comfortable with lending money towards properties that they deem as potential leaky homes, having a home with older plaster cladding (even if there is no evidence of it being a leaky home) may be more than enough to significantly reduce its value when sold.

Secondly, recladding, in general, is a great way to modernise a home. The cladding of a home is generally the first impression buyers will get, and if this is contrasted to a neighbourhood of more modern aesthetically pleasing homes, the perceived value of your home may also take a hit. It is estimated that the curbside appeal of a property can make up to a 15% difference in the price buyers are willing to pay, and modernising your cladding is a surefire way of ensuring you take advantage of this. With the increase in price due to perception and the general increase in the price of the house over time, the profit gained may more than warrant the price of recladding your home.

Considering the layout of your home

There really are two ways to go about creating additional value before selling your home when it comes to renovating the layout. The first is considering how the layout of your home stands up to modern standards. Older homes often lacked modern-day conveniences in relation to layouts, such as entertainment areas being placed on the opposite end of the house to the kitchen, a lack of open plan living, and a host of other antiquated layout features. A house with great bones can often be turned into an open plan home far easier than many people expect and doing so offers buyers far more flexibility with what they can do with the space. It also can create an illusion that the home is bigger than it may be.

The second option is extending the home to create additional rooms. This may be developing the basement, adding another storey, or extending into the yard. This can be used to create additional living areas but is often used to create more bedrooms. A large part of a house's CV is based on the number of bedrooms, and creating additional rooms may push the value of your home into a higher cost bracket.

Should I remodel my Kitchen Before Selling? What About Bathrooms?

It goes without saying that some rooms leave an impression. Putting a bit of time into renovating these rooms can pay dividends in the overall selling price of your home. This is especially true if these are rooms that buyers can perceive themselves getting value from. They can project its use on their lifestyle, excited at the possibilities it may have. A great example of this is the heart of the home, the kitchen. The kitchen is a space in a home that has so much potential for creativity, and can really serve as a centerpiece of the house. An interesting, well-designed kitchen is an aspect of your home that is sure to leave a lasting impression and be a point of discussion when people are considering purchasing the home. A great kitchen can be the literal deciding factor for potential buyers that love to cook and entertain, with the cost to remodel the kitchen being far less than its potential ability to create perceived value for the rest of the house.

Similar rules can be applied to bathrooms or creating a spectacular entertainment area. However, the more specialised the room is, the more likely the renovation is going to cost. It pays to weigh up the cost of the renovation against the perceived value to the buyer.

Time, Convenience, and Money

There is often a false presumption that renovating properly to sell isn’t worth it because buyers will just renovate once they move in. In reality, this couldn’t be further from the truth. With the distance between median house prices and median income earnings increasing, many homebuyers will be highly leveraged when buying a home. This means that they will not have the spare capital for home renovations and will be looking for a home that is fit for their purpose.

Secondly, it pays to remember that most people may have never renovated before and therefore have no idea what's involved in doing so. This means that they will have trouble visualizing a space's potential and lack the experience to understand what is possible if they went down the renovation process. However, this does not exclude them from appreciating a well-planned newly renovated space. Given that they may not understand the costs involved creates the opportunity for you to easily exceed your sunk costs with the overall sale of the property.

Finally, do not underestimate the value of convenience. Renovating can be a time-consuming process, as is buying a home. A combination of both of these factors may be the tipping point in a buyer deciding not to pursue a property.

Does renovating a home increase its value?

Renovating a home prior to selling may certainly increase its value. It is an effective means of addressing any “weak points” your property may have that decrease it’s overall perceived value - whether that's getting rid of the “leaky home '' stigma or modernising the layout. It can also bring it into alignment with houses in a higher price bracket through extensions or adding features that create lasting impressions with buyers. The balancing act is choosing the correct renovations whose costs can not only be recouped but exceeded, during the sale. Renovation Works has over 30 years of experience helping kiwis create their dream homes and can guide you on the best options for renovating your property to pull a better asking price. For a free, no obligations consultation, get in contact with the team at Renovation Works today

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