Australians spend billions of dollars on home improvement each year, as they renovate, extend and improve their properties. It’s a popular topic among home buyers and investors alike, with many people interested to know how to add value to their home, while improving its amenity and appeal.
Equally important as adding value to a home, but perhaps less well reported, is how the changes people make to their properties have the potential to negatively impact its value.
Whether you’re a property owner, seller or potential buyer, understanding the changes that add and subtract from the value of a property can assist you to make better decisions.
According to research six of the most common ways to decrease the value of a property include:
1. Adding and removing rooms
When renovating a home, adding a room or space is often a great way to add value to a property. However, removing one room, such as a bedroom, in favour of another room, such as a dining room, in a two or three bedroom home can have the opposite effect – instead decreasing the appeal and liveability of a property for the bulk of would-be buyers.
Likewise, adding an additional bedroom without also adding an additional bathroom and break-out spaces could also miss the mark.
When renovating for profit, consider your target market. If you’re a buyer, consider the cost of a potential retrofit of a bad renovation strategy before making an offer.
2. Removing car accommodation
Parking is an important aspect of a property, particularly if located in inner-city areas where parking is scarce and subject to restrictions. Likewise, a garage is a typical feature of homes in many suburban areas. Removing parking, whether off-street or garage can have a significant impact on the value of a property amounting to hundreds of thousands of dollars in some cases.
A property that can integrate car parking and other features like a home office, outdoor area or gym may benefit from increased value, assuming they don’t compromise use of the space.
3. Selecting a unique colour palette
The colour palette you select for your property can have a significant impact on its value. Bold colours, textures and surfaces can be a risky choice, minimising the appeal to future would-be buyers. Select neutral paint colours, natural tones and materials for flooring and benchtops to maximise the appeal of your property. Utilise furnishing to brighten your property, but be wary of extending this tendency to window furnishings, as curtain choice can have a big impact on some would-be buyers given the cost to replace them in many cases.
4. Outlandish features and architectural styles
When renovating a home it’s important to consider how the changes you make relate to the area in which your property resides. If it’s located in an area with historical significance, an ultra-modern style is likely to impact the street scape and continuity of design, with implications for the value of your property and your neighbours’. Similarly, an Italianate home in a modern or emerging area may appear out of place, with implications for its value.
5. Adding features without official approval
It’s not uncommon for property owners to add features to their home, such as balconies, decking, windows, pools or additional driveways, however, in most cases these additions require planning approval.
While you may go undetected when installing the features, once you sell a home you are required to provide official planning documentation to certify your property is above board. In some cases, if the addition contravenes planning guidelines, it must be removed with implications for both the value of your property and your hip pocket.
6. Poor planning and budgeting
Planning and estimating the cost of a renovation can be difficult. It’s important to budget for project blowouts, and to have a contingency if the project runs longer than expected.
When planning note that not all properties and locations demand or appreciate top-of-the-range appliances, fittings and ancillaries. The features and amenity should be matched to the market.
When undertaking a renovation project, ensure you see it through to completion. Selling a property with an incomplete renovation can have a negative impact on final sale price.
One of the most important fundamentals of renovating a property is to avoid overcapitalising, to ensure you achieve a minimum dollar-for-dollar return on your investment when it comes time to sell
If in doubt, engage a professional, such as a property valuer or property advisor, to assist with assessing the current and future value of the property before undertaking the project.[SOURCE: WBP PROPERTY GROUP – 11 JULY 2017]