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Renovation - Dream Or Nightmare?

Renovating a home is time-consuming and not always the wish-fulfilment the home owners planned. There may be a financial blowout, especially if home owners deviate from their original budget as new ideas occur to them. Is there a reasonably simple way of working out whether a projected renovation will be a dream come true or a financial nightmare?

Before going ahead with any major improvements, home owners can do some simple research to determine whether their money will be well spent. They should not simply assume that spending x dollars on their property will increase its value by x dollars.

First, they should estimate the average sale price being achieved for similar houses within a four kilometre radius of their home, making sure they are looking at final sales figures not advertised asking prices. These figures should enable them to estimate the current reasonable selling price of their property, without renovations. Once they receive written quotes from licensed well-referenced local builders they can add the cost of renovations to their value estimate and come up with the figure they would need to sell the property for in order to break even.
 As a rough guide, the final (including renovations) estimate of what the property should sell for should be no more than fifteen percent higher than the original (excluding renovations) one.

But of course, the ultimatel question is: are there similar properties selling in the area and are they achieving the price the owners would need to achieve? Special houses don’t always sell at face value because they may be negatively affected by thestandard surrounding properties and the low desirability of the area to those seeking upgraded homes.

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