It’s the fundamental question facing anyone who has ever embarked on a home renovation – “how likely am I to get the money back when I sell my house?”
By: Hitesh Khan/
There’s no easy answer if you can get your money back, because what a buyer might be willing to pay depends on many factors — everything from the choice of project to the materials you use to the value of other homes in your neighborhood. But it’s important to have some idea of what your improvements might be worth.
If you want to invest more than you can hope to recoup because you love your house and plan to live in it for a long while, that’s fine. But consider the following guidelines and you’ll avoid unpleasant surprises in getting your money back when it comes time to put up that ‘For Sale’ sign.
Not all remodeling projects are created equal. People buying a house look first at kitchens and bathrooms. So, while these rooms can be the most costly to redo, they’re more likely to pay for themselves and help you get your money back.
Bigger homes on higher floors typically command higher prices. And at the other end of the spectrum, swimming pools hardly ever return their cost, because a lot of buyers aren’t willing to shell out more for a house just to acquire what they consider a maintenance bother. Home offices tend to be low-return for the same reason: Only a handful of buyers will want a room designed for working.
And just because a project is expensive doesn’t mean it will pay back more. Often, minor improvements can yield major dividends. An analysis of cost versus value shows that a kitchen “face-lift” — painting, refinishing surfaces, and upgrading appliances — will return more than a full redesign. The key to spending less is spending it wisely. This means, if you take $20,000 and spend it judiciously on a kitchen, you can make it look a million times better. The design and product selection are key in getting your money back.
Even when your remodeling job is an appealing improvement for most buyers, it adds little value if done to just your taste. You have to think in the back of your mind that you’re going to have to sell the house someday. When deciding that you want to renovate, be mindful that you don’t want to lose the integrity of the house or spoil the entire appearance of the home.
The same holds true for smaller projects, too. For example, when choosing kitchen cabinets, countertops, and flooring, aim for classic or neutral colors and styles. The bottom line is, don’t expect somebody else to pay for your unique and funky choices.
If you are trying to get some money back from the renovation of your home, come time to sell, remember the real estate agents’ mantra: “Location, location, location.” You’ve probably heard the phrase often and may wonder what inspires agents to say the word three times. In a nutshell, location, location, location means homes can experience large increases or decreases in value due to nothing other than their location. The saying’s repeated three times for emphasis, and it is the number one rule in real estate, while also often the most overlooked.
The most desirable locations with the highest home values are those in prime spots, such as:
- Areas with Top-rated school districts
- Areas with recreation facilities and nature
- Homes with scenic views
- Areas with entertainment and shopping nearby
- Areas with good public transport connectivity
- Areas which are far from the industrial zones
In getting your money back, remember that the longer you stay in your house, the more likely you are to recoup your costs. With home prices rising year-on-year, your outlay will eventually be absorbed into the increase in the property’s value. Plus, you’ll be able to enjoy your renovations for those years. A few caveats: There is no natural law that says prices must go up, so don’t depend too heavily on that annual bump. And remember that sometimes life can throw a curve, and you might have to put your house on the market sooner than expected.
For some projects, time also works against you. There’s stylistic depreciation. All the current fads, how will they look ten years from now? Kitchens and bathrooms are especially prone to looking dated. So, be mindful of all these factors if you are renovating your flat now, but are looking to recoup your invested money sometime in the future.
Do you know enough about how property valuation is done in Singapore?
Knowing how to calculate the property valuation is of paramount importance to a home owner. It can help you determine whether you are overpaying for a home, or whether you have gotten yourself a real bargain. Paying the right price is just one way you can avoid overspending on your property.
Another smart way to avoid overspending on your property is to get the right loan. Getting the right loan can be a much simpler task, but only if you get the right person to it for you. Get in touch with iCompareLoan’s loan consultant to help you get the best loan deal at the right price.
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