How to avoid overspending on home renovations
When buying a home with the intention of renovating or extending, it’s important that the cost of the improvements match the increase in property value.
First-time buyers are now moving into their second homes up to 12 years after their first home. One reason is they buy older properties in good locations and then slowly renovate or remodel them as finances permit.
“At the same time, many other owners are weighing current home prices plus the costs and inconvenience of moving against the cost of making some changes to their existing homes, and deciding to stay put,” said Berry Everitt, CEO of Chas Everitt.
But while it’s relatively easy to spot what needs to be done to convert a dated house into a desirable modern home, or to make space for a growing family, it’s often not so simple to ascertain that the cost of those improvements will be matched by an increase in the property’s value.
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“This does not mean that there are no bargains to be found or gains to be made from home renovation, which can also be extremely rewarding on a personal level.
It does mean, however, that buyers and owners need to take proper precautions to avoid over-capitalising by undertaking expensive home improvement projects in an area that would not immediately support a sale price that included the original cost of the house plus the cost of the planned improvements.”
And the only real way to do this is to enlist the help of a qualified and experienced estate agent to establish the current average market price of pre-owned homes in the area.
At the same time, you should seek qualified advice on whether the house you plan to renovate is structurally sound, on whether it needs costly re-wiring, re-roofing or new plumbing and on the estimated cost of the changes you would like to make.
You can then work out whether there is a sufficient margin between the average home selling price in the area and the current value of your home to justify what you plan to spend on renovating or upgrading the property.
The current average cost of additions and alterations to existing homes in SA is R7 323 per sqm, which is 17 per cent higher than at this time last year.
But not all home improvements are this costly.
For example, a few weeks of hard work in the garden can give an older home a whole new look and boost its market value considerably.
A fresh coat of paint, new or restored flooring and modern lighting are a few other ways to add value without breaking the bank.
• Information supplied by Private Property.
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