Are you renovating?
Renovations are usually a form of restoration or addition that increases the value, comfort and attractiveness of your property. It is a common mistake that all renovations almost always increase the value of a property. Australians purchase properties as investments that will allow higher returns at a future time, therefore overcapitalization must be taken into consideration.
Overcapitalizing is when the costs of renovations exceed the value added to the property and there are acceptable acceptable scenarios where there’s no intention to sell or to profit.
For example: if you were to purchase a property for $450,000 and make an outdoor improvements worth of $50,000 the value of the property won’t suddenly be worth $500,000 if the highest someone would purchase a property in the area is $460,000.
You can minimise overcapitalization!!
Get an Appraisal!
Have your home valued for its current market value in relation to current market conditions. Once a value is obtained decide on how much to spend and where to spend on renovations.
How’s your Neighbourhood?
Make observations and educated guesses on what the potential buyer within the area would be willing to pay for your property in its current condition. Make sure the buyers aren’t limited to paying a ceiling price where they will not pay higher than a specific value.
Budget! Budget!! Budget!!!
Have yourself limited to spending below a specific dollar amount and plan purchases to fall below the specified limit. Research on costs of materials to get the best deals on your purchases.
Best form of improvement within a modern home is to use energy efficient materials and appliances, as initial costs are eventually covered through the savings generated over time.
As an agent myself I have the experience to guide you through some of the above steps. Please feel free to contact me to see what services I can provide you to improve your renovation process. Oh! Almost forgot that we’re offering free appraisals at ONLY estate agents!