The Value of Value Adding

We’re always talking to our clients about whether a property has room to add value through renovation, but why? Because it’s a great way to manufacture your own growth in the property. Rather than sitting back hoping the market will go up in your favour. You’re putting the performance of the property in your own hands.

What do we mean by ‘value-adding’? We mean spending a dollar, to make 3 (or more!).

This is something that we often discuss with new vendors while preparing a property for sale. It’s very common for any home to have some pretty questionable looking carpet, daggy curtains, scuffed walls and overgrown gardens. We always encourage owners to spend between $5-50k on ‘pre-sale’ works freshening up the property before they go to market. We explain to them how spending this money is usually proven to triple in its return. The average buyer has little imagination and a lack of understanding on how much these items will cost them. So having freshly painted walls, decluttered and styled spaces, manicured gardens and modem window treatments, the perception of the property is that it needs little to no work and is ready to move in! Which in turn will have buyers throwing more money to secure the property as well as more buyers in the mix in general.

Now that we’re usually working on the buyers side of the fence, we make sure our clients see through these quick fixes and look closely at the structural integrity of the home and any longer term improvements needed. The cheap paint job, hire furniture, garden beds full of tan bark etc… We explain that this has all been done for sale, in about 2 weeks, and we don’t want them to be overpaying for them at auction. Instead we look to the ugly ducklings. The stinky unloved property. The daggy kitchen. The unrenovated bathroom. The throw-back wallpaper…. Value value value!

You need to make sure you understand what is going to actually add value to a property. Would you pay extra for hydronic heating over a reverse cycle? Probably not.. Would you prefer hydronic heating, yes! But it's not going to make you more money on the re-sale.. So if you’re planning on living and enjoying the property for many years, it might be worthwhile to install. Same with solar panels. If this is something you want to install in your home, then we encourage you to do it. Although please understand buyers typically will not pay extra for a property with solar panels! Also, it's important to note that generally, what is seen adds more value than what is unseen.

If you’re planning on doing larger ‘value adding’ like major renovations and extensions it is very important to check in with your local real estate agent to find out what the local market wants in a renovation. There’s no point renovating to sell, and finding out what you've created, people don't want or need!

Ideally the value adding which you've done has ultimately increased your sale price if you plan on selling it, or has created some equity. If you’re wanting to hold on to the property it might be an idea to head back to your bank and get them to re-value it.. You never know, you might have enough equity for a deposit for the next property purchase! 

So get your paint brush out and start sprucing up the place!