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Post-Remodel Property Valuation: When to Have Your Home Reappraised

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Post-Remodel Property Valuation: When to Have Your Home Reappraised

Many homeowners suddenly find themselves with energy and enthusiasm to embark on improvements and renovations with the express objective of adding value to their lifestyle or investment.

This long-term approach to looking after and enhancing your living space may be challenging at times, but often proves well worth it in the end, particularly at sale time.

There is no easy fix so it is always sensible to do your homework first and talk to the professionals that span tradespeople, real estate agents and successful investors.

Not all renovations are equal and differ significantly in their contribution to the overall price of your home.

Not all renovations are equal and differ significantly in their contribution to the overall price of your home. Be it the installation of an in-ground swimming pool or brand new kitchen or verandah, it is always good to shop around first to ensure you get the biggest bang from your buck.

From a real estate owner and investor’s perspective, renovations are geared to increase the price of a home during its ownership and at sale time. Adding value to the home will also impact insurance premiums, borrowing potential and eventually, the sale price.

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For many people, their home is their superannuation and therefore, a very serious asset.

The following tips will help you look after your investment, spend wisely on improvements and at the end of the day, achieve the property valuation and sale price you deserve.

Do Your Homework – Pre-Purchase

Herron Todd White, Australia’s largest valuation and advisory group, says it is important to do your homework before you launch yourself into the housing market and commence the process of value-adding.

Research the market and ensure that the property you are considering meets your needs and is the best your money can buy.

According to their information for homebuyers, start with understanding the process.

Research the market and ensure that the property you are considering meets your needs and is the best your money can buy. Herron Todd White’s monthly review reports provide helpful insights into local markets by location.

Then onto the next step — a pre-purchase property valuation. This will rule out any questions of whether you are paying more than the market price and will provide good bargaining power into how much you are willing to offer and negotiate.

The Cost – Value Equation & Principle of Substitution

Remember that when you decide to spend any amount of money on adding a new room or renovating a bathroom, the cost of the improvement is not automatically added to the value of the home at a particular time.

“Before committing to any project, remember that adding value to your home is based on what the market is willing to pay,” said David S. Bunton president for the Appraisal Foundation in an article for The Huffington Post.

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Once the improvements are complete, arrange for the valuer to visit your home, view the new additions and update the valuation, which will be based on the valuer’s ability to read the market and what buyers are prepared to pay for say, a state-of-the-art kitchen.

The other factor to consider is the principle of substitution. Look at a scenario in which two homes are for sale in the same suburb. The first home has a brand new bathroom on which the owners spent a whopping $50,000.

The second home has the original bathroom. Are the houses of equal value?

Before committing to any project, remember that adding value to your home is based on what the market is willing to pay.

And what is to be gained from buying the home with a higher price, albeit a more expensive, fancy bathroom? Surely it would be more savvy to purchase the less expensive home and then undertake a renovation at half the price.

Curious about the project yielding the best ROI? It’s replacing your front door. A new door means great curb appeal, a first impression that impresses and a nearly 98 percent return on investment according to the Cost vs. Value Report presented by Remodeling magazine.

Environmental Sustainability

Living in a world of skyrocketing energy prices and increased carbon emissions, homes with solar energy panels or those that have been designed and built for environmental sustainability will have a greater investment value than homes featuring traditional electrical circuits and air conditioning, for example.

The installation of solar and other sustainable mechanisms will prove fiscally sensible in the long term and impact your property valuation report.

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Consider Your Location

The time-worn cliché, “location, location, location” will always be relevant and the number-one factor in the value of a home. It’s better to buy the worst house on the best street than vice versa.

The scope of value-added improvements needs to be considered carefully based on geographical location.

However, for homeowners, regardless of what street they live on, the scope of value-added improvements needs to be considered carefully based on geographical location.

Take for instance, adding an in-ground swimming pool. You will have far more value adding a pool to the garden of a home in Cairns, Far North Queensland than in Tasmania where swimming weather prevails for just a few months each year.

Maintain Your Asset

Real estate valuers reward house-proud people with higher valuations than those who neglect their property despite its location, facilities and number of rooms.

Keeping air conditioning, roofs and eaves, gardens and fencing in good order all speak of a well-maintained property and contribute to a higher value.

The same goes for tidiness and cleanliness. Keep clutter to a minimum. “Don’t forget, it isn’t going to be the first thing the valuer sees; it’s also going to be the last,” said James Freudigmann, Manager Propell National Buyers Advocates, in an article for Your Investment Property dispelling myths and relaying truths about property valuations.

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Walls, particularly corners, get nicked all the time. Keep the paint touched up. Give the walls a new coat if they need it too. Paint is an inexpensive facelift.

Good Record Keeping

Like you would when you buy a new electrical appliance, keep good records of quotations, written correspondence, tax invoices, receipts and pest inspection reports.

Like you would when you buy a new electrical appliance, keep good records of quotations, written correspondence, tax invoices, receipts and pest inspection reports.

Note any discrepancies along the way and work out a good filing system that is a quick, go-to for when you need it. This sort of documentation will be helpful to the valuer, and also substantiates any claims.

In a nutshell, there is no definitive list available to homeowners about what will add or subtract value for your house. There is no silver bullet or secret recipe because markets in Australia are influenced by many factors spanning infrastructure, local economy, employment figures, demographics and public amenities.

However, there are some general influencers worth noting that include opting for neutral, earthy colours in your home, good variety of storage options, landscaped front garden that underpins street appeal and finally, a covered outdoor area or patio for indoor/outdoor dining and entertaining.

 

Sources

http://www.htw.com.au/customer/homebuyers.aspx
http://www.huffingtonpost.com/david-s-bunton/home-renovations-and-your_b_5135469.html?ir=Australia
http://www.yourinvestmentpropertymag.com.au/buying-property/the-truth-about-property-valuation-173284.aspx
http://www.houselogic.com/home-advice/home-improvement/home-remodeling-projects-with-long-term-ROI/
http://www.remodeling.hw.net/cost-vs-value/2014/