Many homeowners are opting to renovate their home to accommodate their changing requirements or to fix it up before they sell with the hope that it will add to the market price of the property. While home improvement projects can really add to the appeal and practicality of a home, some will add more value onto the bottom line than others.
Adrian Goslett, CEO of RE/MAX of Southern Africa, says that homeowners undertaking renovation projects cannot expect to splurge on expensive fittings and fixtures and recoup the value of the project when the house sells. “Just because you spent R200 000 on home improvements does not mean that your house is worth R200 000 more,” he says.
Goslett explains that factors such as the direction of the general housing market, the value of homes in the neighbourhood, the nature of the renovation project and how soon the home is sold after the improvement project is completed will have a bearing on how much of the renovation cost is recouped.
“The general rule,” he explains, “is that the longer the homeowner stays in the home after undertaking renovations, the less likely they are to recoup its value. This is because different owners have different requirements and tastes differ too. What one homeowner finds appealing, another may not and style and fashion trends can change dramatically over a relatively short period of time.”
He says that homeowners should always remember that having the fanciest house on the block is not necessarily going to mean it will sell for the highest price on the block. In fact, Goslett warns, a house that is priced higher than its neighbouring homes could be perceived as overpriced even if it does have more value.
Goslett discusses the five top improvements that real estate experts agree pay off more often than not:
Because many buyers see the kitchen as the heart of the home, even a few basic improvements to this room can really pay off. Consider including energy efficient appliances, stainless steel, new countertops, a new sink, a coat of paint and new flooring. Cupboards can also be sanded, stained, painted or replaced if necessary. Where possible a classic design and neutral paint tones are best as these will appeal to a broader range of people. A well renovated kitchen can recoup between 70% and 80% of remodelling cost when the home is sold.
Kitchens and bathrooms are known to get sellers the best boost in value, so these are the two areas of the home where renovation costs can be recouped the best. In fact, you should make back between 65% and 75% of your costs of remodelling a full bathroom and around 65% of the cost of adding a full bathroom. Consider new fixtures including a bath tub, a double sink instead of a single one, recessed lighting, new flooring and wall tiles if necessary and a fresh coat of paint.
3. Creating space
As a rule, improvements that increase the functional space of a home hold their value longer than ones that just make a house look better. This option is also often significantly cheaper and less of a hassle than adding a completely new room to your home.
4. Security, windows and green products
With increases in electricity and a generally higher cost of living, utility bill savings are a big advantage, and so it stands to reason that shrewd energy-efficient improvements can add to the resale value of a home. Efficient windows and doors, a new roof and perhaps maybe even solar panels may be pricey to install, but around 65% to 76% of this cost could be recovered at resale. Security features are also always an important consideration in the home buying process, and many South African homeowners will appreciate a strong security system in a home.
5. Basic Improvements
The basics are always more important than fancy new fittings and fixtures. A beautiful new kitchen and bathroom will add no value if the roof is leaking or rising damp is a problem, for example. It is the basic improvements that will provide the greatest return on a home's value. Homeowners who are considering selling in the next year or so need to start any home improvements by tackling any problems with the home's structure or systems such as the plumbing before installing a Jacuzzi, for example.
Goslett says that there are also some home improvements and additions that are nice to have, but that add very little value to a home’s selling price. These are:
While nice to have and a great facility for many homeowners, a swimming pool adds no value to a resale price at all. In fact, some home buyers spend thousands of rands to fill in a pool after purchasing a property. Expensive upkeep and the fear of liability mean that for some, the responsibility of a swimming pool will detract from a property more than add to its value.
Manicured gardens which will require time and money to keep looking good usually won't add to the selling price. With today’s hectic lifestyle, many homeowners are looking for hassle free and low-maintenance homes. While landscaped gardens certainly add appeal to any home, when it comes time to sell a property, a garden is not going to add to the price tag, and should rather be considered as investment for the owners’ enjoyment. The same goes for expensive fences and stone walls. They look nice, but buyers don't pay up for them.
Lastly Goslett says that any homeowner wanting to undertake a home improvement project should be careful to keep within the limits of the neighbourhood. “Adding features such as a home theatre, games room, sauna or built-in bars are great projects if the owners are planning on staying in the home for a long time and are not too concerned about the resale value. The best point of reference to determine your ceiling is when it comes to renovating is to consult your real estate agent about property prices and requirements in your area.”