Two houses in the same location (for e.g. Codrington Crescent or Paritai Drive), of similar size and with the same CV, can sometimes sell for a big difference in value. I get questions from clients all the time expressing such surprises at the differences in value, or expecting a significant increase in value because they have done this and that.
All this begs the million-dollar (literally!) questions: how can you add the most value to a home, and what value do high specifications add in the current property market? Should you even renovate before selling?
High-Specification Homes in The Eastern Bays & Remuera & Demographics
In general, it may be worth spending more on “high spec” features for homes at the high end of the market. However, for more modestly priced homes you have to be careful not to over-capitalise, or overspend on improvements that won’t increase the value of your home.
Of course, what it means to be the ‘high end’ or ‘modestly priced’ home of the market depends on the market you are in. Almost all homes in the Eastern Bays (aka Glendowie, St Heliers, Kohimarama, Mission Bay and Orakei) and Remuera belong to the expensive side of Auckland so there’s no point comparing these homes with those in other suburbs. This is borne out by the higher median sale prices. What you should know is that there are homes that are on the lower end of the ‘Eastern Bays/Remuera’ scale, and homes that are on the other (high) end of it.
So whether or not a “high specification” renovation adds value depends on the demographics of an area.
Different buyers value different things – you basically need to understand what sort of buyer you are catering for. Is your home more for the first-home buyer (especially active in the current market) or for the upgrader? Is it for the executive who likes a lock-up-and-leave or the rich tycoon looking for that trophy cliff-edge home? Or is your home suitable for a buy-and-hold investor?
This is why it’s important to seek the advice from a real estate agent who can tell you quickly what sort of renovations makes sense, and can save you from some financial grief. Nothing beats the feeling of having spend hundreds of thousands of dollars on a renovation, only for you to fetch a price that’s lower than what you could have fetched if you simply sold as is (minus renovation costs). In the current property market, it’s entirely a possibility.
Kitchen & Bathrooms – Expensive vs Cheap
Splashing money on kitchens and bathrooms will usually add value to a home. The kitchen and bathroom are one of those spaces that can make or break the sale for many buyers. Hence it makes sense to focus on those areas.
But if you are deciding between spending $15,000 or $40,000 (yes, I’m aware of super high end ones with the butlers pantry and scullery etc) on your kitchen makeover you need to consider the overall value and location of your home. On a higher priced property you are likely to add at least the value of a ‘high spec’ bathroom. It may in fact be detrimental to your sale price if you add a ‘cheapish’ kitchen on a higher priced property.
But at the lower priced property, you might be better to spend $10,000 instead.
A modern kitchen that doesn’t break the bank will still add value to a home in terms of saleability. It does generally help in the sale of your home in this property market (i.e. actually selling at cost vs not selling at all) because many buyers are put off by the thought of doing any renovations or just don’t have the cash. But be aware that if you spend $50,000 on a kitchen in a modest home (i.e. below $1 million as a rough guide), you are very unlikely to get the same value back. The trick is making a $10,000 renovation look like it’s worth $20,000 – and that itself is a skill.
Landscaping – should I spend on this?
Landscaping can add a significant amount of value to a property from the aesthetics perspective. Everyone can appreciate a beautifully landscaped lawn and perfectly cut tree hedges. And I’ve seen some truly gorgeous gardens in clients’ homes in Remuera and St Heliers, and learnt lots about gardening (thank you!).
But you should know that there may not be a direct relationship between value spent and value added. The added value of well-presented landscaping is generally on the overall saleability of a home through increased street appeal/utility.
It is a great way to get potential purchasers through your home on open homes, or to even look at your listing – obviously this assumes you have a stellar marketing plan (again, not correlated with amount spent) and great agents. This is especially critical in a buyer’s market.
So to answer the question on how much you should be spending on landscaping, again it does depend on the overall value level and type of property. The market expectation of the level of landscaping in a high value home is significantly greater than that of a lower value suburb.
For more expensive homes (i.e. more than $2.5 million), landscaping starts becoming important to potential buyers who are looking for the X-factor. If you are cash-constrained and thinking about where to spend your money on, I would generally suggest that landscaping is on the lower end of your priority list.
The style of the property can also dictate the nature of the landscaping and site development utilised. For example if you own a high end character villa, you really want to keep that picket fence (you can repaint or restain it) rather than replace it with something more modern.
Replacing timber joinery in a villa/character bungalow with modern aluminium joinery should also be reconsidered – this typically does not enhance the character and can detract from the value (although it obviously adds better insulation to the home).
Garaging – I love cars so I should add more gararging!
Garaging is another element that is also very dependent on the locality of the property. In larger land sites, a new garage may not add much in value, especially if there’s plenty of parking. But if yours is a large land site with a single house and perfect for a intensified development by a developer, then building a garage may seem a little out of place and put these developers off.
However, where land is literally at a premium (like in the Eastern Bays and Remuera) and the lots are much smaller (very common nowadays) and off-street parking is scarce, a garage could add a significant amount of value to your property. It is not unusual to have buyers looking specifically for garage parking space for 2 cars.
Should this garage be internal access only or detached? If you have the budget, go for internal access garages. They are just more popular and practical, especially if you are already spending that amount to build a garage. Make sure that garage door is a colour that stands out, yet does not detract from the overall look of the house.
Should I add that pool for summer?
As the summer heatwave hits (hopefully soon given the chilly weather now), the idea of a swimming pool in your backyard is a seriously attractive one, especially if you just came back from a poolside holiday in sun-soaked Bali. Surely you can justify the cost by the value it will add to your home in the Eastern Bays and a potential buyer will appreciate the pool?
Sorry to break the news but…not necessarily. In fact, the opposite may be true. In some cases, swimming pools can put off prospective buyers who fear the ongoing maintenance costs and time, the dangers to kids or even the space pools can take up on the section which they would prefer to have other structures on (like a deck).
Of course, the decision to install a swimming pool isn’t all about your property re-sale value. It’s about the personal enjoyment of you and your family – that your family and friends get a great place to enjoy summers. (And the obvious prestige factor)
So if you’re considering adding a pool, here are some things to think about (this deserves an entire post on its own actually):
- Location, location, location. Given how close many in the Eastern Bays are to the beach, you should reconsider this. You may risk over-capitalising by spending on a pool when Kohimarama beach is a 5-min walk away.
- Size of the property and pool matters. Consider the size of your section. Will the addition of a pool take up the majority of your backyard? If so that may deter a number of buyers looking for a good size section. Is there already a deck? Many buyers prefer that over a pool, especially at the lower price points (below $1.5 mil). Large pools can make your section smaller and less usable, particularly to buyers who just can’t prioritise the need for a swimming pool. That means the buyer pool (hahaha) literally just shrunk.
- Look and compare quotes. If you’re committed to getting a pool for your own family to enjoy but are mindful of the impact it may have when it comes time to sell your home, then just perform your research on all the different styles and construction options of pools. Look for that sweet spot of a pool that will meet your needs without running over your budget or the section. If your pool is too cheap in an expensive house (like I said above), sophisticated buyers can be put off. If your pool is state of the art with all sorts of filters etc and just way too expensive, you run the risk of over-capitalising. You should also think about whether the pool should be heated (or not) – generally, it should.
- Consents and compliance. Remember that some pools require consent. Therefore don’t rule out the addition of a spa – less costs, more portable and less issues. If you already have a pool, make sure it is in tip-top condition before you sell. Make sure it is scrupulously clean, fenced to meet all legal requirements and that all surroundings such as fences and decks are well maintained
One Last Thing: Distinguish Between Maintenance vs Adding Value
Some people take the view that a new relayed carpet, some quick painting or roof replacement will add value to the property. Unfortunately, that’s not really the case.
Carpets are a chattel and replacing of roofs/gutters etc fall under the category known as repairs and maintenance.
A roof is expected to be functional and do its job. I’ve yet to come across a buyer who said that the ‘new roof’ made the difference between him/her buying the house and not buying it.
On the contrary, you will lose buyers (and therefore competition and $) if your roof leaks. So as long as the roof of the dwelling is well maintained, functional and in reasonable condition, the value will not largely be impacted by the roof. Giving a good roof and exterior wash can often make a difference in how your home looks, and the impression it gives to buyers. If these are not properly maintained, potential buyers will wonder what’s wrong with the house and simply not buy
Final Thoughts For You To Think About
- You may not make your money back if you spend too much on renovations. Hence you need to take extreme care.
- Spending on renovations can help achieve a sale in this market (vs not even achieving a sale at all).
- Not all renovations are created equal. Doing up the kitchen and bathroom usually yields the greatest return.
- Distinguish between maintenance and adding value. The former is necessary and expected by buyers, especially if you want a sale at a decent price.
- You need a competent, forward-looking agent that can present your property in the right light, with or without renovations.
Found this post useful and have more questions?
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