First-time buyers rarely find their dream home. When entering the market, it’s more common to focus on affordable properties but still keep a keen eye out for position, land size and potential.
Most new owners are grateful to be finally in the real estate game, but that novelty eventually wears off, and then it’s common to start to think about how to maximize the value of your home and climb the property ladder.
As an experienced real estate agent, I applaud this approach. It’s an excellent strategy for using real estate to build your wealth.
But it’s easy to be a little intimidated by the cost and complexity of home improvements and it can be hard to know which offer the best chance to secure a great price when it’s time to sell.
It’s tempting to look at your home and focus on areas that need the most attention. But that could be the wrong approach if selling is the ultimate goal.
Here is a quick list of tips for how you might approach a remodeling project for your home.
- Don’t over-capitalize – This means be careful of spending more money on a renovation than the value that it will add to your home. For example, a kitchen would be worth no more than 15-20% of a property price so this will impact the amount you spend on appliances, benchtops and tiles or splashbacks.
- Clarity is critical – Be sure of what you wish to do and achieve. Vague plans end up costing a lot of money and not always producing the finish you were seeking. Clarity will also deliver an accurate budget.
- Budget for reality – It’s easy to under-cook your budget. Not only should you be honest with yourself about the cost of the project, but you’d be wise to put aside an extra 15% for contingencies; that is, for things that go wrong or unforeseen problems that need to be fixed.
- Finance options – It’s always a good idea to work out the best way of paying for the upgrade before you start. You might be able to refinance or use a line of credit attached to your home loan. Explore all the options before committing yourself.
- Get three quotes – Make sure you brief each contractor in the same way so you have consistency in the quotes that you will compare. If you’re having trouble separating the contenders, I suggest leaning towards the one who was clearest in their communication with you. A good relationship is worth a lot of money, especially on significant projects.
- Ask questions – Ask your contractor questions about the best and most economical ways to complete the job. Sometimes, they can compromise in one area to free up cash that can be applied elsewhere. Of course, do this before work begins.
- Be disciplined – It’s easy to change your mind and ask for little extras, even big ones. In most cases, this adds to your cost. Most contractors will tolerate a few requests but start to lose confidence in their client if the demands keep coming.