Property sellers often assume that they are obliged to invest significant amounts in renovating a home before it is suitable for sale – but this isn’t always necessarily the best course of action and may not be a profitable endeavour if it is unlikely to result in a higher sale value.
While there are circumstances where renovating a property that has fallen into disrepair may be beneficial, it is important to weigh up the pros and cons and avoid spending needlessly.
The Clive Emson team discusses the merits and drawbacks of renovation prior to a property sale, depending on your intended sale method and the level and nature of home improvements you are considering.
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Renovating a Property Before an Auction Sale – is it necessary?
Auction sales routinely attract property professionals or investors with an established team of partners along with private buyers, meaning that residences in need of renovation or modernisation prove popular with bidders with the budget and expertise to invest in improvement works and add value to their investment, or to have a blank canvas for their next home
Sellers keen to achieve a fast sale should also consider the trade-off between speed and valuation, where it could take several weeks, if not months, to renovate a property that has been vacant for some time or needs a complete overhaul.
Properties that require renovation can be an appealing prospect for several reasons:
- While you might expect to list a property for a lower reserve price, where renovation work is required, the interest in these projects can create a competitive bidding environment, thus possibly returning a higher sale value than the same property once fully renovated.
- The buyer audience you appeal to will influence the efficacy of a full renovation, where private buyers, developers, landlords and investors specifically look for lots where they have the potential to add value and return a profit.
- Buyers looking for properties in a good location or with a sizable plot may choose a renovation project over a restored property, knowing that they have greater flexibility to apply for change of use permission or perhaps renovate a home into two apartments.
If in doubt, we’d recommend contacting the Clive Emson Auctioneers for further guidance or visiting our auction pages for insight into the types of properties that sell well within the auction setting. For more information about the auction process and how it all works, please visit our guide to Selling your House at Auction.
Should you need a substantial renovation budget and not have time to complete large-scale works, it may be that selling the property as-is is the right way forward.
Dealing With Serious or Structural Repairs
Where a property has severe defects or structural issues, it is often impossible to sell through a conventional private treaty sale. That isn’t because buyers may not be interested in adding their stamp or renovating the property to their tastes but because it is difficult to secure traditional mortgage lending against a renovation project.
This scenario does not apply to a property auction, where all bidders are pre-registered buyers who already have funds in place. However, some sellers choose to address issues such as dampness, leaking roofs, rising damp, insect infestations or subsidence to improve the saleable value of the property.
As always, the advisable strategy will depend on how likely the property is to sell in its current condition and whether the cost of making those improvements would be worthwhile and reflected in a higher sale price.
We’ve written about this in detail here: Selling a property in need of repairs.
Renovating a Property for a Sale via Private Treaty
Should you have the capacity, it can be worth addressing any straightforward jobs that make a property ready to move into since these tend to be the most popular, particularly if your target buyer demographic includes first-time buyers who may not have a large home improvement budget.
The work you carry out might include the following:
- Replacing old grout or sealant around frames that have become worn.
- Fixing tiles or floorboards that are loose or broken.
- Filling cracks in the walls, sanding and repainting.
- Giving the property a thorough clean, paying attention to scuffs and paintwork damage.
- Fixing leaking taps or replacing taps that don’t function properly.
While the work shouldn’t be expensive or time-consuming, a few quick repairs, alongside cleaning out clutter, can help prospective buyers imagine themselves living in the property and think about how they might position their furniture and belongings within each room.
Related reading:Â House Auction or Private Treaty Sale? Why not both?
Which Renovations Add Value to a Property?
As a very rough rule of thumb, the best renovations to make include damp proofing and roofing since a residential buyer might be reluctant to make an offer against a property where they are concerned about major work or needing to replace whole sections of the roof.
The caveats we’ve explained apply where this work can be costly and take an extended period to complete. Therefore, if you are planning an auction sale, an auctioneer might advise that your property will sell quickly in its current condition.
Other areas that buyers tend to prioritise include kitchens and bathrooms, purely because the cost of new appliances, worktops and fittings can be high. However, the average price of a new bathroom suite starts from around £3,500, and a new kitchen costs from £5,000 for a small kitchen, depending on the quality of the fittings. Of course, adding an extension may cost upwards of £30k! Unfortunately, it is never possible to know with certainty that any changes you make will be to a buyer’s taste.
Developers and auction bidders are usually less concerned about the condition of these spaces, as their intention will typically be to renovate or revamp the layout of the property to suit their purpose – as a rental property, an investment acquisition, a development site or a residential home.
While renovations can be useful if you want to maximise your sale price through a private treaty sale, it’s never a universal necessity and may not always be money or time well spent.
Please get in touch at any time to discuss your property, the sale price you hope to achieve, and the potential benefits of renovating – or selling your property at auction without further expense.
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About the Author:
Sam Kinloch
Sam’s career in the dizzy world of property auctions began when he hung up his chainsaw and headed in from the forest. Joining the team in 2003 Sam now sits on the Board of Directors and has been instrumental in the adoption of online auction services. Out of the office you can find him flying around the velodrome or sipping coffee at a local café.