House fixes that make (financial) sense
13 November 2015
Home improvements pretty much pay for themselves when it comes to selling your property, right? Not necessarily. In fact, if you are thinking of making changes purely to increase re-sale value, you need to do some research before hiring that contractor.
"Not everyone will put the same value on the renovations you make," explains Albertus van Staden, head of credit at FNB Affordable Housing. "For example, adding a pool may be seen as an investment, but the next buyer only sees the maintenance that goes along with the property. In general, renovations will lift your value, but you may not get the full investment back when you sell your property later on. The pool may cost you R50 000, but may only add R20 00 to the value of your property."
According to Statistics South Africa, the additions and alterations market, which is worth around R25.5 billion a year, is currently growing at around five percent per annum, suggesting that South Africans don't shy away from a home makeover.
So, what's a safe bet?
"Modernising or upgrading kitchens and bathrooms definitely adds value to the property and purchasers are less likely to put in a lower offer if they feel they don't have to spend on these once they have bought," says Marian Draper of Courtly Homes.
However, Annamarie du Toit of Van der Merwe & Robertson Properties points out that this is only a smart move if the rest of the house is in good condition.
"If the property is old and in need of renovation anyway, my experience is that it is not worth renovating only the kitchen and bathroom as a buyer of an older home may prefer to renovate the property from A to Z, and won't want to pay extra for a kitchen and bathroom that they'll change anyway."
To keep costs down, opt for changes within the original footprint of the house. Knocking down a few internal walls is considerably less expensive than adding new foundations and roofing. Stick to décor that won't date quickly, and try to create as much usable space in the kitchen and bathroom as possible.
"In my experience, an open-plan kitchen, which is functional and suits the style of the house, has the highest value," says Lebogang Madumo, the owner of Timeless Décor Services. "If you are planning to add a utility scullery area, make sure that you know exactly how the area will be used."
Madumo points out that the trend towards more eco-friendly living is here to stay, so installing solar panels and water tanks will not only start paying for itself, but will also attract future buyers.
A safe home is an attractive home
Making your home more secure not only gives you peace of mind, it also makes it more attractive to potential buyers. According to Du Toit, upgrading your security is an obvious choice if you are trying to increase the value of your home.
Adrian Good, the general manager of Subscriber Coastal, ADT Security, recommends combining physical barriers to entry with an armed response system.
"Electric fences, security gates, and burglar bars not only serve as physical barriers to entry, but also act as a deterrent. An armed response alarm system will ensure that if your property is breached, a security service provider will be on hand to assist immediately," says Good.
Too much of a good thing
Van Staden warns that it is possible to overcapitalise your property. This occurs when you are unable to recoup the money you spent on improvements when you sell your property.
"This is typical when luxury fittings are installed in a house — the finest imported Italian floor tiles, granite table tops, crystal chandeliers — or luxury extensions such as lapas. The simplest way to avoid overcapitalisation is to ask yourself: if I had to sell the house, compared to the other houses in my area, would I get the value I am looking for? If all the houses of similar size to yours in the area sell for 20% less than what you'd expect, you may be overcapitalised."
However, if you plan to stay in your home indefinitely, overcapitalisation isn't really a problem. Some alterations — such as a swimming pool, an entertainment area, or a conservatory — may not add financial value, but they will certainly add lifestyle value. The key is to be clear with yourself about why you are making a particular alteration.
"It just means that you might not be able to realise the full value when you do have to sell the property later on," explains Van Staden. "Or, possibly, you would have to wait a period for the market value of the property to increase so as to cover the initial capital outlay expended over and above the market value on inception of any improvements or upgrades.
Improve your home's curb appeal
If you are looking to increase your property's value, you need not spend a fortune. According to Van Staden superficial fixes —such as a fresh coat of paint — can easily improve the value of your property if done correctly.
Remember that not everyone has the same taste as you, so stick to neutral tones when repainting your home. Madumo suggests using cool colour palettes and hues when repainting north-facing rooms. He also recommends using durable and – if possible – eco-friendly finishes that work in harmony with nature, and making sure that your lighting choices suit the ambiance of the room.
In addition to a fresh coat of pain, Angelique Victor of Florstore OnTrend recommends paying attention to your flooring.
"If your ceramic tiled floor needs a facelift, contract a tiling professional to re-grout. That same professional can give your porcelain floors a deep clean, while a reputable carpet cleaner who does hot-water extraction can revitalise an old carpet," suggests Victor.
"Having a small budget set aside for a flooring upgrade before marketing your property will allow you to install a multi-functional luxury vinyl floor, which is my first choice when there are budget and time constraints."
First impressions count, so paint that exterior wall, tidy up the garden, replace old house numbers, fix anything that is obviously broken, clean the roof and gutters, and varnish any wooden doors or window frames. Right, now you can start that Pinterest board for your dream kitchen.