You're putting your property on the market. You know there are a few scuffs on the walls, and your carpet is a bit dated. It's time to decide; do you renovate before you sell?
Firstly, let's weigh up the pros and cons.
PRO: Renovating will make your house look more attractive to potential buyers. A snazzy kitchen and some fresh bathroom wall tiles can be enticing to those buyers looking for an emotional connection with their future home.
CON: Investors may be looking for a 'knockdown rebuild', and renovations might make this more difficult. In effect, by renovating you may alienate a key demographic of your potential buyers.
PRO: Renovating can be a good way to add value to your property. Adding a fourth bedroom or additional living space can make your property attract a broader market, and may induce bidding wars on auction day.
CON: Renovating can be costly, and it might not be worth the hassle. If you spend $20k on renovations, it is important to consider how much value you are adding to your property. If it's only aesthetic differences, and it ends up costing you an arm and a leg, you may not be able to make up in value what you have spent on the reno.
PRO: If you are nestled in amongst a dated neighbourhood, a renovation might make your house the best of the bunch, a diamond in the rough, and raise the profile of your future auction.
CON: If your neighbourhood traditionally does not attract high prices, renovating may be fruitless. Generally speaking, it is land value that earns you the big bucks.
So, as you can see, renovating before selling can have both benefits and detriments.
Now, here are a couple of tips to keep in mind when you are making this potentially costly decision.
Tip #1: Take market conditions into account. It might be a good idea to enlist a real estate agent to do a property appraisal, and predict what the house might sell for as it stands. They should be able to advise on whether renovations are likely to bring you a profit.
Tip #2: Kitchens and bathrooms sell houses. If these areas are functional and tidy, then put your wallet away and leave their fate up to the future buyer. However, if your bathroom vanity looks like its been pulled straight from the set of a (shabby) black and white movie, a refresh might be in order.
Tip #3: Be neutral. If you have decided to go ahead and renovate, remember that your property needs to appeal to a broad market. Use placid tones and non-offensive design. This way the buyer can easily add their own quirks in the future.
Chat to your broker about different ways you can fund these potential renovations - redrawing from your loan or topping it up are just two of the options at your disposal!