Too often I see homeowners grappling with the sell versus renovate decision and many take the wrong path.
Earlier this year a couple approached me regarding their 376 sqm block and 150 sqm three-bedroom home. But with Mum, Dad and 3 children, they admit they had outgrown the house before they had even moved in. Worse still, they purchased through a Buyer’s Agent, paying $1.5m for the property, significantly over the reserve.
But paying above the odds through a Buyer’s Agent is not the mistake I wanted to highlight. After 12 months of looking, and with pre-approval to upsize to a bigger property, the couple decided not to sell but to instead renovate their existing home. They are not experienced renovators however, so their $250,0000 renovation budget to add on a second story soon blew out to double that cost.
Many renovation budgets do run over, but this is a tale of overcapitalising on the land by creating too much house for not enough land. Compare this to continuing to search for properties up to $2.2million, which would effectively ‘save’ the family – with the cost of raising three young kids – $500,000. The renovation also doesn’t address their issue of outdoor space for the children to run around but this realisation won’t become apparent till all the work is done, the money has been spent and they have moved back into the home. It’s a common confusion of indoor versus outdoor space, and it can cost homeowners dearly.
It’s not always the case that selling is a better ‘investment’ than renovating but I have lost count of the number of families who have had these discussions with me this year – and in previous years – and when you run the numbers, selling can be the better option.