Double your profit after renovating?! How to renovate before selling to make your home more competitive
With the right approach, even a modest renovation can make a big difference!
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Although New Zealand’s record net migration last year helped fuel the housing market’s recovery, persistently high OCR and mortgage rates are now preventing many new migrants from entering the market. Effective demand has lagged behind, leaving many homeowners disappointed and feeling powerless when their properties sell for less than expected.
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Yet the current market still offers opportunities. A CoreLogic report released in November last year showed first-home buyers accounted for 26% of the market, well above the long-term average. Only a minority have the skills to renovate homes themselves, and many buyers are looking for properties that have already been renovated. This means properties that match buyers’ preferences are undoubtedly more popular in the current market. Their owners have used renovations to make their properties stand out and strengthen their market appeal. This clever renovation strategy not only offers more attractive choices to new migrants and homebuyers, but also delivers cumulative improvements in property values and sale prices.
Property consultant Jono Frankle, who won a local New Zealand home renovation show, believes the right home renovation plan can deliver homeowners a 200% return on investment。
Discussing the residential property he renovated for the show, Frankle said its condition was appalling: outdated fittings, stained carpets and walls… Even the most professional home staging would have struggled to disguise its neglected state.
But after just a month of joint effort by Frankle and his wife, who organised tradespeople and worked on the property themselves to replace kitchen and bathroom fittings and other fixtures and finishes, this ‘property disaster’ was transformed into a ‘money-making venture’.
Fellow professional property renovation specialist Mark Trafford shares Frankle’s approach. In Trafford’s experience of renovating and investing, skilled renovators make every dollar in the budget work as hard as possible, rather than exceeding the budget to match a design blueprint.
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Trafford outlined the following buyer preferences that homeowners can cater to through renovation
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This Chinese industry professional has some thoughts on interior design
In the current subdued housing market, some of the most disappointed sellers are those who have put considerable thought and effort into their properties but still cannot find a buyer. With too small a market for their property, they ultimately have to accept a lower sale price, leaving their efforts unrewarded. So how should creativity and commercial considerations be balanced? Interior design and real estate experts may offer a broader perspective.
Laura Heynike, founder and creative director of Pocketspace Interiors, said people had endured so much monotony during the recent pandemic that their home design preferences had subtly shifted. She had recently seen growing interest among New Zealanders in vibrant patterns and layered textures found overseas. More homeowners were asking for these ‘personal touches’ in their interiors, which could become a trend in 2024.
Many New Zealand homeowners are enthusiastic about bold colours and design styles (image source: OneRoof)
But from a real estate perspective, renovating a property for sale in too individual a style could narrow its market. Bayleys property agent Cristina Casares said: ‘Owners renovating a home for themselves use strong colours and a mix of materials and textures. Some sellers choose distinctive designs to suit their own preferences, but when it comes to reselling residential property, buyers’ views on these designs remain very polarised, so reliable colour schemes, such as black, white and grey, can actually win over more potential buyers.”
A simple colour scheme with broader market appeal (image source: Board & Vellum)
According to OneRoof’s interviews with professional property investors and real estate agents, in the residential resale market, essential maintenance is more cost-effective than renovation.
Even small issues, such as damaged fixtures or furnishings and minor paint damage, count against a property in many potential buyers’ eyes. Addressing these details can therefore leave a good impression. In kitchens and bathrooms, replacing appliances and fittings is not cost-effective because most buyers will replace them with their own choices after purchasing, so keeping existing fittings as clean and tidy as possible is enough. For colour schemes, using grey and white throughout the interior can make a property feel spacious and bright, while a deeper grey-and-white palette or naturally weathered blue-green is sufficient for exterior walls.
Some real estate agents say spending more on presentation can deliver excellent value. Professional decluttering or home staging before a sale, for example, can put away or remove distracting clutter, or arrange furniture to improve the flow through a room. This makes it easier for potential buyers to connect emotionally with the home during a viewing and imagine their future life there. Finally, excellent photography, video and marketing can sometimes help a property attract more potential buyers, giving owners a wider choice of offers.