Should you renovate before selling your property?

Annie Button has written an article that discusses the wisdom of whether you should renovate before selling your property.

With material shortages putting building works on hold and interest rates affecting our ability to scale up the property ladder, a common question for property professionals right now is ‘should I spend money renovating a property before I sell?’.

In an ideal world, you want to sell your property for more than you paid for it and make a profit, but it can be complicated when you factor in the cost of renovations and upgrades. You want to be sure the money you’re spending will yield you a profit rather than a loss. With this in mind, let’s take a look at the factors that can influence this decision and whether or not you should renovate before selling.

Check the housing market first

Before you make any decisions about your property, it’s important to check the national housing market as well as what is happening to house prices in your local area. If you’re looking to sell at a time when the property market is red hot, you won’t need to worry as much about renovating before you list on the market. With current uncertainty, rising interest rates and the cost-of-living crisis, the prospect of buying or selling has dampened.

A slow buyers’ market may mean that you need to make more significant improvements to your property to attract a higher price and incentivise it as a prime buying opportunity. However, you may also want to consider the rising costs of building works and renovations to determine which path you’re prepared to take in a volatile economy.

The key is to make sure that you’re clear on how enthusiastic buyers are right now before entering the selling market, and especially before you carry out any expensive work.

Consider what buyers are looking for

There are typically two types of buyers: those who want a home they can move into straight away with minimal effort, and those who want a fixer-upper that they can put their own spin on. If you’re targeting buyers who want a move-in ready home, then renovating before you sell can be beneficial. These buyers are more inclined to pay a bit more for a property that’s ready to go, whereas someone seeking to flip a property will want a discounted home they can make a profit on.

What to consider as a seller

Renovations aren’t just about what a buyer looks for, but also what you need as a seller. You need to factor in the cost of the renovations, but also the timeline of how long it will take for those upgrades to be completed.

How will project lead-times, and possible challenges along the way, align with your longer term property plans. A large building project may require permission from an existing neighbour in accordance with the Party Wall Act, which could delay a project such as a new loft or a kitchen extension if you haven’t gained their permission to proceed. Or, you may be delayed based on when you can get local contractors to work on the build. Factor these aspects into your decision-making because they could put your wider plans on hold temporarily.

Similarly, the potential value of the property may further dictate how much you wish to invest in bigger renovations. Your overall budget and potential for profit after renovating are important If there are works you can do yourself, such as decorating, enhancing the garden or laying new flooring. Some renovations can all have a big impact but won’t eat into your profits as much as larger renovations which will require a professional team.

Choose upgrades that bring in value

If you’ve made the decision to renovate, think carefully about the upgrades that will have the most impact on your sale price. For example, an addition such as a loft conversion or a property extension can add major value by increasing the square footage of your property, something that a growing family will find immense value in. Anything you can do to add space to the property will increase its value and, ultimately, your profits so it offers great returns.

In most cases, good renovations will add value to your home when you come to sell. A kitchen or bathroom remodel is also something that can be really valuable to a potential buyer, since it’s a job that can be time consuming but is an area of the home that has a big impact. There are also smaller jobs you can do, such as repainting kitchen cabinets or adding more storage, which can help to lift the look of the home before you put it on the market and are quick to implement.

Know what appeals to buyers in the area

Lastly, before you embark on property renovations, make sure you know what really sells where the property is located. Understanding the key wants of your buyers could change what you choose to do to the property to make it a more enticing option on the market. For example, if you’ve planned on putting in a kitchen extension but it turns out many people are looking for a bigger garden, you could be making your home less appealing by moving forward with your upgrades.

The decision to renovate or sell your property as it is, depends upon various factors, from the current market to your budget and timelines. Renovations can be costly and time-consuming, so it’s important to think about the ideal timeline you’re looking for to progress a sale and what you can do to not only maximise your profits but also speed up the process as much as possible. Once all these factors are considered you may need to rethink the types of upgrades you invest in.