Every homeowner invariably reaches a point where they must ask themselves the question: Will I fix my current house, or sell it? Turns out, either option is bound to cost some time and effort. This month, we break down the different steps to take for each scenario.
I’m Staying Put
For many of us, the idea of packing up and moving house is a stressful…not to mention expensive. Breaking down the exact costs can be tricky, but once you factor in transfer fees, moving costs, cleaning services, and a whole host of unexpected expenses, it makes sense that many homeowners are choosing to renovate rather than move.
Of course, large scale renovations have their own set of drawbacks. In many cases, you may choose to live in your home while renovating. This can be a disruptive exercise, filled with many possible worst-case scenarios. As a savvy property owner, it’s always important to consider what will add value to your home in the long run. It’s been well documented that the two areas in a home that adds value are the kitchen and bathrooms. According to Michael Corbett from Trulia, it’s important to consider your neighbourhood and the types of buyers that target the area: “Don’t over-improve. You likely won’t get your money back in the sale,” he cautions.
Andrew Mirams, MD of Intuitive Finance explains: “A well-costed and well-managed renovation can convert a two-bedroom home into a three-bedroom one or add that extra bathroom that a growing family needs for, potentially, a fraction of the cost of selling up and moving somewhere new.” His advice is setting up a detailed renovation budget: “The most successful renovators create a detailed budget and stick to them, but they also include contingency funds for cost and time over-runs. They also understand the value of using professionals who will complete tasks efficiently and probably to a higher standard than you can yourself.”
According to advice from Jawitz, it’s important to take timespan into account: are you planning on selling your property within the next year, five years, or twenty years? This will impact the scale of your renovation. If you’re thinking of selling within the next year, it’s wise to stick to cosmetic upgrades such as paint or flooring. Not only is this relatively inexpensive and easy to do yourself, it also restricts the disruption to your everyday life. “Renovating a kitchen, adding a bathroom, or putting in a swimming pool are the sort of improvements you’re unlikely to recover if you sell in the short term, but will add o your comfort and convenience if you’re taking a longer view,” they explain.
If, after careful consideration, you’ve decided that it’s best to pack up and go, what do you need to do to sell your property for the best possible price? According to Adrian Goslett, CEO of Re/Max Southern Africa: “Every person who is selling their home wants it sold for the best possible price, within the shortest timeframe. To achieve this, the home needs to be appealing to the highest possible number of potential buyers.” One technique, used by many sellers, is home staging. In simple terms, you’re setting the home up for success with buyers. You want to highlight the home’s best features, and enable viewers to picture themselves living there.
Should I fix up my home before selling?
If you’ve decided to sell your home, you may be wondering if it makes sense to renovate prior to putting it on the market. Aside from ensuring the property is habitable, is it really that important to renovate the kitchen if you’re not going to be the one using it?
Look around at other homes for sale in your neighbourhood. This will give you a few clues regarding the competition. In many cases, up-and-coming areas are targeted by those looking to fix up a property themselves. In these cases, it might make more sense not to spend money on renovations prior to selling. According to Elizabeth Weintraub from Lyon Real Estate, it’s important to know who your buyer is: “Some buyers want to buy a fixer-upper, but generally these buyers want a home that will require light cosmetic repairs. Buyers who gravitate toward fixers are generally those who don’t qualify to buy a more expensive home, or those who want to make a profit by fixing the home themselves. Fixer-uppers will discount the price of the home to allow for the repairs and, for the inconvenience, a bit more.”
Advising on whether or not it makes financial sense to renovate prior to selling, Laurence van Blerck from Knight Frank South Africa explains: “Marketability refers to the desirability of the property from the buyers’ perspective, and value is its likely selling price taking into account the accommodation on offer, the area and its amenities, whilst bearing in mind the supply and demand for similar properties on the market. Some repairs and renovations will improve a property’s marketability without resulting in a significant increase in its value.”
According to Van Blerck, it’s crucial to keep the dangers of over-capitalisation in mind: “Decorations and finishes are subjective. What one person might see as a dream kitchen, might not be to someone else’s taste. It can be difficult to recoup money spent on big-ticket items when putting a home on the market.”
In short, he explains that if your goal is to increase your home’s marketability, it makes sense to apply cost-effective methods to spruce up your home: “To get your asking price, or even a little more, spending money and time on a home can be worth the effort.”
By Monique du Toit