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Renovating and upgrading your house before placing it on the market is always a good idea. However, spending too much on renovations can hurt your return on investment. It’s called over-capitalising, and it means you’ve spent more money on a renovation than you’ll get back in return when the time comes to sell.
The most common areas to over-capitalise are in the kitchen and bathroom. It’s easy to be a little overwhelmed the fancy showrooms and spend upwards of $50,000 before you know it.
We recommend you to stick to the budget and keep it basic! A modest budget can still deliver the maximum value when it’s time to sell.
Let’s start by addressing a basic rule of engagement: if you’re selling a family house or apartment, you need to attract a broad range of potential buyers. Installing high-end furnishings and finishes can alienate many buyers because you’ll want the renovation costs baked into your asking price. If you don’t, odds are you’ll be taking a loss on those improvements.
Of course, it is not a one size fits all approach. Here are five tips to help you before making your next renovation decision.
Consult an agent
Consult an agent for an appraisal of your home before you start the renovation work. Ask for suggestions on the improvement areas of your house. Talk about the buyer preference and get a better understanding of the buyer demographic for your house. These are crucial steps when making sure that you won’t be wasting money on things that barely affect an increase in the sales price.
Don’t overdo the DIY
It’s tempting to save money by completing the work yourself. However, unless you’re a professional, the finish might not be optimal. That’ll alienate some potential buyers and may negatively affect any price negotiation.
Don’t aim too high
Avoid trying to capture the top-end of the market. This will limit the number of potential buyers. Aim your renovations towards the mid-market, where you’ll find the most buyers willing to pay a competitive asking price.
Ditch top-of-the-range
Don’t purchase top-range finishing as not everyone will appreciate the value. Stay conservative with your spending to achieve a positive financial result.
Don’t forget the kerb
Every agent will tell you kerb-side appeal is critical. Simple cosmetic upgrades are great at the front of the property. Inside, you can make a big impression with little touches, such as updating door handles, light switches, and power points. This is especially important in the more confined space of an apartment.