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RENOVATING VERSUS RELOCATING

 


Many homeowners have asked themselves the question: “Should I stay or should I go.” However, says Adrian Goslett, CEO of RE/MAX of Southern Africa, the decision to stay put and renovate your existing home, or to sell it and buy another house, is largely dependent on each homeowner’s individual circumstances and preferences.


If you do decide to renovate your home, be careful of overcapitalising, where you spend more money on additions or renovations than the value they add to your property. Says Goslett: “The total value of your property, which comprises its current value plus the cost of the proposed additions, should not be more than 25% higher than the average property in your area.”


He notes that homeowners need to look at their neighbourhood and find out what the average home in that area consists of: “If the average home has three bedrooms and two bathrooms, and your home only has two bedrooms and one bathroom, then it will probably be worth adding on another room and bathroom.” However, in the above example, Goslett says that it won’t be worth your while to add another three bedrooms and bathrooms to this home. Doing this would seriously narrow the market for potential buyers who would be prepared to pay the required asking price that would cover the value of the property plus the costs of the renovations.


“If your property is in a good area, and you have owned it for many years, there is less danger of overcapitalising, as your home would have grown in value over that time. However, bear in mind that if your property is in a good area and your house is really old, then it might be worth your while to demolish it entirely and build a new one. This is because the costs of building new are much lower than the costs of renovations, as builders charge premium prices for relatively small renovating projects,” explains Goslett.  He says that in some cases, it may be worth it to look around as you may find you are able to buy a home in a similar condition for less than you would spend on the renovations.


Goslett also points out that it is vital to calculate the costs involved in both renovating, selling and buying another home: “To calculate what it will cost you to renovate, you need to compare a couple of quotes from building contractors. Since the cost of renovating or building can vary dramatically, depending on what you want done and the finishes you chose, it is essential to get detailed quotations that specify the exact finishes you want. Quotes that are based on estimated per-metre costs are dubious at best, and don’t allow for proper comparisons. They often lead to much higher costs down the line.”


The kind of renovations you decide to make will also be a primary consideration with regards to the financial feasibility of the proposed project: “You need to take into account whether the additions you are planning will add to or detract from the aesthetics of your property. Cheap ad-hoc additions usually have the potential to seriously devalue your property. Renovations that add the most value to a property comprise upgrades to the kitchen, bathroom, living and entertainment areas of your home. But always remember, it is more often than not kitchens and bathrooms that sell homes.”


Also, it is important to consider your future needs, he says: “For example, it won’t really be worthwhile to add on two extra en-suite bedrooms if your children are expected to leave home in the next few years.”


Goslett’s final word of advice: “Homeowners need to carefully weigh up the pro’s and con’s of renovating vs. buying before making a final decision. At the end of the day, the decision is often largely influenced by cost and personal circumstances.”


ISSUED BY GREEN GRAPES COMMUNICATIONS
ON BEHALF OF RE/MAX OF SOUTHERN AFRICA



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