Are you wasting money renovating your home?

We’re mad about renovating, but be careful not to over-capitalise your home by spending too much money on renovations.

home-renovation

Home renovations have become very popular in Australia over recent years thanks to the success of TV programs such as ‘The Block.’ Australian Bureau of Statistics figures show that during July 2014, Australians spent $618 million on home renovations—a jump of over $100 million compared to the start of 2014.

If you are considering renovating your home, it could prove to be a financial windfall or a financial headache depending on whether you add real market value to your property or over-capitalise it by spending too much money on the renovations.

It is quite typical for property owners to undertake a renovation totaling $50,000 and then immediately sell their housing expecting to recover this $50,000 as well as making an additional profit.

Unfortunately, Professionals agents are finding that many of these home owners do not achieve a higher sale price for their property because they have undertaken these home improvements for emotional rather than for sound financial reasons, and as a result, they have made the mistake of over-capitalising their home.

To avoid this common mistake, anyone who is considering undertaking a home renovation should check the selling prices of similar renovated homes that have been renovated in their local area. This will give them a good indication if you will recover all of the costs associated with renovating your home if you were forced to sell the property at short notice.

It is also wise to consult your local real estate agent about renovations to determine if they will add real value to your home or prove a costly mistake. Sometimes, it may be financially wiser to sell your existing home and buy another home with all the extra’s you require.

Apart from over-capitalising their property, home renovations make a number of other common mistakes that can actually devalue their home. A common mistake with home renovations is that many people try to undertake home renovations themselves. This can prove costly in time and a financial mistake because a poor standard of work will only devalue the property be discouraging buyers from purchasing the renovated property.

If you are employing a builder to undertake your home renovations, you should check that they belong to a professional building organization. In addition, you can ask them to view recent work which they have undertaken in the local area

When purchasing a renovated home, buyers tend to focus on detail of the renovations so you should take a similar approach when selecting a builder who can complete the home renovations to the highest standard.

Finally, if you decide to sell your home after it has been renovated, the buyer will normally require information about the approvals you undertook for the any renovations. It is therefore important to ensure that you get local government approval for any major renovations to your home such as building an alfresco area or new external walls.

 

 

thanks therealestateconversation.com.au