Should you renovate your home before you sell?
When it comes to selling your home the to-do list can seem overwhelmingly long, particularly when it includes the added item of pre-sale renovations.
Whether it’s adding new tiles in the bathroom, replacing the kitchen benchtops, or recarpeting the bedroom floors, renovating your property before it goes on sale is something all sellers consider.
To help determine whether you should renovate before you sell you need to think about what renovations you’d do, how much they’ll cost, and the difference they could make to the final sale price.
Home renovations start with research
Before you commit to any of life’s big decisions, whether it’s buying a car, travelling overseas, or signing a rental agreement – you make sure to do your research.
For vendors considering pre-sale renovations the first step is no different.
“If you’ve got time, then you start to look around, go and look at properties, see what they’re selling for and do some market research.”
This involves looking into neighbouring property sales, how renovated sales compare to unrenovated ones, and looking at local buyer demographics.
“A lot of the time people say to me in appraisals, you know, I’m thinking of redoing the kitchen or bathroom and spending $80,000, and it’s probably only going to add about $50,000 in value to the house,” he said. “Doing the research about renovated versus unrenovated is the key.”
Buyer demographics are also critical. This involves knowing who your property will likely appeal to – owner-occupiers, developers, or investors?
“I’ve had it happen before where people have gone in, all guns blazing to put in a beautiful bathroom, but they’ve ripped out the bath,” said Waller.
“And then no family wants to move in because they’re paying a premium for a renovated house and a bath might be important to them. So you might be hoping to get an increased sale price but you’re actually narrowing your buyer pool.”
Engaging a real estate agent early on in the process means vendors have access to their research, industry expertise, and insights into the local property market.
“We’re in the market every day. We’re going to save people a lot of time and money just by saying, ‘leave that to the next person’,” he said.
What are the best pre-sale renovations to do?
Deciding which renovations you should get done is step number two. The unique quirks, condition, and style of a property will determine what renovations need doing.
“It all depends on the state of the property,” he said. “Some properties need an entire overhaul, some need the garden party tidied up, and other properties need decluttering.”
Franceschini said that the kitchen and bathroom were big-ticket items in any property to renovate.
“Most buyers don’t want to have to do anything, so when they walk into a property they’d just like to see themselves put the clothes in the cupboard, put the couch in the lounge room, and turn on the TV,” he said. “New splashbacks, benchtops, and new appliances can really enhance the kitchen.”
When Komorowski listed 14/28 Torrens Street, Braddon in Canberra there was immediate interest.
“It aesthetically attracted more attention during the campaign because it was photographed beautifully,” she said.
The apartment had received a fresh coat of paint, new carpets, with updates to the kitchen and bathroom.
“They put new hardware on the taps and the door handles in the bathroom,” she said. “In the kitchen they updated the oven, range hood and added a dishwasher. And it was absolutely schmick, it was beautiful.”
After investing close to $10,000 in pre-sale renovations the vendor’s sold the property for $625,000.
No matter how much you invest in pre-sale renovations it’s important to remember that the changes are for the market.
“It’s not for you personally so it’s important to keep things neutral and not polarising,” said Waller.
Because the kitchen and the bathroom are usually the main make or breaks for people looking at property, Waller said it’s important to keep things fresh with neutral tones.
The price of making over the two pivotal rooms of the house will vary considerably according to the size of the kitchen and the bathroom, the work being done and the materials being used.
“How long is a piece of a string?” he said. “That $12,000 mark is what a lot of people spend on a smaller kitchen without a big island bench. But then just replacing the bench set can be under $1,000 depending on what you’re replacing it with.”
The small renovations that make a big impact
Vendors can take on all different sorts of renovations from adding an ensuite to ripping out the old carpet.
Ray White’s Franceschini said renovations typically involve cosmetic changes or structurally changing the property
“Cosmetically, a vendor should do everything that they can to tidy up and show the property in its best light,” he said. “If you want to add rooms and all that sort of stuff then that’s a different kettle of fish, then you’re talking hundreds of thousands of dollars as opposed to tens of thousands.”
There are some cosmetic renovations that often help produce a good result at the point of sale. Vendors can quickly freshen up a property by applying a coat of paint, new flooring, and light fittings.
In July 2021 Franceschini successfully sold a three-bedroom Mount Saint Thomas in the Illawarra region because of cosmetic renovations.
The vendors of 280 Gladstone Avenue spent $24,000 all up preparing, tidying, and renovating the property for sale.
“They applied a lick of paint, tidied up the bathroom, and polished the floors, just cosmetic stuff,” he said. “It certainly helped the end result on the sale price.”
Franceschini estimates the vendors got back three times what they had invested when the property sold for $760,000. The property had previously sold less than two years ago for $530,000 in February 2020.
Whether it’s big or small, structural or cosmetic, the trick with any renovation is not to spend more than you need to.
“I can’t really think of a time where I’ve walked in and gone ‘oh what have you done?’,” said Waller. “But what I have done is walked in somewhere where they’ve just overcapitalised.”
“It can’t really be a blanket rule but if you’re doing a cosmetic renovation you really shouldn’t be spending more than 10% of the property’s value on renovation.”
Easy fixes for the heart of every home
- Replace or paint the kitchen cabinets
- Upgrade the stovetop
- Install new kitchen benchtops
- Add a splashback in the kitchen
- Display new kitchen appliances
Are home renovations worth the investment?
The fear of overcapitalising your property before it hits the market weighs heavy on vendors.
While it’s impossible to pinpoint the likelihood of making a return on your renovations you can make informed investments that guide your pre-sale decisions.
“In our agency we make careful choices,” said Komorowski. “People always ask us, ‘if I invest this, will I get my money back?’ Or ‘how much of it will I get back?’ And it’s a really hard one to quantify.”
It’s often the more aesthetic makeovers that have the highest impact and bring about the highest return at HomeByHolly.
Waller said the goal is to earn $2 on every dollar you spend. In the case of suburbs within a 20-minute ring of Hobart’s CBD, Waller said that renovations can make a big difference to the final sale price.
“We’re seeing unrenovated property sell in the early five hundreds, and then in the early to mid six hundreds, is where we’re selling semi renovated or renovated homes,” he said. “So these people will have spent, you know, $40,000 to $60,000, but they’ve uplifted the value of their home by say $100,000 to $150,000.”
In October 2021 Waller sold a two-bedroom, two-bathroom house less than 15 minutes drive from Hobart’s CBD.
In the lead up to listing the vendors spent approximately $1,200 on new vinyl flooring in the kitchen and laundry, $2,500 was spent freshly painting the inside of the property, and $7,000 went towards a basic bathroom renovation.
“Total spend was approximately $10,700,” he said. “But we believe this uplifted the value of the home by around $50,000 when comparing our pre-reno appraisal price and the eventual sale price post-reno.”
On top of the cosmetic and structural changes to the house, the owners also spent $4,000 staging 15 Dillon Street before it went on the market.
Having come to a decision about whether to renovate, which renovations to do, and how much to spend vendors need to find the best way to pay for it all.
To help manage the cost of pre-sale renovations, however big or small, many vendors use the pay later solution ListReady.
ListReady provides access to listing costs of up to $35,000 covering all pre-sale prep from marketing to renovating. Using the pay later platform vendors pay nothing upfront and repay when the property is sold or within 6 months.
Start researching your pre-sale renovations and visit ListReady today.