Big renovations fail to recoup costs on re-sale: poll

Posted on 18/02/2010  

Home owners who spend on renovations are not recouping the costs in additional re-sale values, according to a survey of PRDnationwide.

 

Most PRDnationwide agents polled said that while renovated properties will generally sell quicker, they may not sell for more.

The agents agreed the most basic cosmetic touch-ups, such as painting and landscaping, will sell for more profit.

But PRDnationwide Mudgeeraba agent Karl Grossman warns people thinking of selling their home to be wary of a big renovation.

“There is a diminishing return on investment,” he says. “You can spend $2,000 in the right areas and get a $10,000 increase in sale price. But don’t spend $10,000 and expect a $50,000 increase.

“The least expensive repairs and improvements add the maximum value.”

Grossman says a home-owner at Reedy Creek on the Gold Coast spent $60,000 on a swimming pool hoping it would boost her sale price substantially, but received only $30,000 more for the property.

The most financially successful jobs are smaller-scale, lower-cost renovations that improve the exterior appearance of homes.

“Street appeal is king,” Grossman says. “Many people do a drive-by before looking inside. It’s much easier to sell a house that looks good on the outside than vice versa. People make up their mind before they get to the front door whether or not they like a property.”

Brad Miller, director of PRD Jens Gaunt in Warrnambool, says the appearance of the house from the outside is more important than ever.

“A great looking facade will increase the positive experience when the buyer is making inquiries,” he says. “Get it valued first and get some advice on whether or not the renovations will add the value required and the return needed for the investment.”

Among the remodeling jobs faring the worst in return on investment were large, upscale extensions or kitchen and bathroom renovations.

PRDnationwide New Farm director Adam Gray says renovation for profit was becoming harder. “Owners need to understand the importance of working to a budget,” he says. “You need to research who you are targeting as a buyer.”

Gray says it’s crucial to call in the experts.

For anyone thinking of renovating before listing their home for sale, here are some tips:-

·         It’s better to focus on presentation rather than renovation. Getting professional advice from a property stylist will give a better result.

·         Simple things like moving furniture, extra lighting, adding art work and cushions will improve resale value.

·         Renovations will always cost more and take longer than your budget.

·         Don’t just design what you like; if the idea is to sell the home, you must cater for the local market.

·         Don’t over-capitalise.

ENDS

 

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