Ep 51. Should I Renovate Before Selling?
In this episode, Michelle discusses if you should renovate before selling and what to consider.
Here’s what you’ll learn from today’s episode:
How advice from real estate agents can help.
The importance of doing your own research into the current market.
What online portal can give you valuable information to help with your decision and how.
Why using a reputable solicitor when you sell is crucial.
Speakers in today’s episode:
Michelle May - Michelle May Buyers Agents
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Please note that any views or opinions presented in this podcast are solely those of the speakers, and do not necessarily represent those of any business. These views and opinions are general in nature, and do not take account of your personal objectives, financial situation and needs. Please consider whether it applies in your circumstances and seek professional advice wherever appropriate.
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VIEW TRANSCRIPT
Hi and welcome to the Buy Your Side podcast, the property podcast to help you make smarter property buying decisions. My name is Michelle May, and I am the principal of Michelle May Buyers Agents here in Sydney. Normally I talk about being a first homebuyer and how you have to navigate the property market to the best of your abilities and in my past episodes I've hopefully given you some tips and tricks on how to best do that, to equalize the balance of power but I am aware that some of you may already own a property and obviously quite often you'll need to sell that before you are able to buy your next one and make that next step on the property ladder.
Now I got a question today, asking me how do I decide whether I should do any improvements on my property before selling, like who judges, what makes the best return on investment and I thought that was a very interesting question and I thought it would be relevant to you if you are a first home buyer as well because there are some tips and tricks that I can give you in terms of doing your research, that will stand you in good stead when it comes to buying your next property
The first resource I would use, say you own a house and you want to buy a new house, another house, because you're moving to that next stage in life, you need more space perhaps. The first resource I would actually use would be a sales agent so you're probably going to be selling your house with a sales agent, right? So, I've said this to you before, try and get at least 3 reputable agents through the door and ask them for their opinion. They go through so many properties they know what the buyer market is looking for in that particular area, in your area that you currently own. Glean their expertise and see what they come back with. It might be that you need is a lick of paint and some styling, but it could well be that they say listen you need to tart up your bathroom, maybe replace your sink unit and get some more storage into the bedrooms. If there is a running theme from these agents, they're probably right, and it's important to draw in the biggest buyer pool as possible to appeal to as many buyers as possible in order for you to get the best possible sale price, in order for you to get more choice when it comes to making that next step on the ladder. It's important to have a deep and wide buyer pool to drive up the price at auction. Not ideal as a buyer, but this is the reality as a seller.
The other thing I would say is that, as a seller, it’s really important to do your own research as well. So yes, listen to what the sales agents have got to say and but ask them for those comparable sales that they think best match your property. Then look at those critically, and you can do your own research as well on domain and real estate, find those recent sales in your area that have basically got the same attributes, firstly looking at how many bedrooms. If you've got 2 bedrooms look at all the 2 bedroom properties that have sold in the last three months, have they got 1 or 2 bathrooms, have they got off street parking - yes or no - and then look at other things like land size, location, is the street that you're in a really desirable location, or is it massively busy, does it have commercial in there and a bus route. That would probably score less desirable than the premium road where it's all beautiful character homes and treelined for example. You've got to be absolutely 100% honest with yourself. I know that your home is, you have memories there and you're proud of your home, and you've done things to it and it's hard to be honest, but you have to be in order to help yourself in this process. Look at aspect, look at the size of your bedrooms, look at the age of the bathroom and the and the kitchen, etc. That will help you not only give yourself a really good understanding of what your property is probably worth and whether it’s in line with the sales agent, but also what is the running theme in your suburb, are most houses for sale there, that are getting the better prices, really attractive to family buyers or is there a lots of terraces, is it the houses that have a downstairs bedroom do they get the higher prices. What is it that draws in the most buyers? Then you can work backwards from that and go what am I prepared to fix up, if anything needs fixing up, and how much am I going to have to spend on that, and how long is that going to take me, because you've also got to remember that the time and effort that it takes is costing you by not making that next step on the ladder and particularly if you have an underperformer, what I call it, not such a fantastic property, let's say it's a fibro home as opposed to a brick home or you know that the floor plan is flawed, it's not ideal, then the longer you hold onto that property the wider the gap is going to be to get that rung up the ladder to a better home. Do you understand what I'm saying, because the prices are going to continue to rise. It's important that you take that next step in a timely manner so that you don't miss the boat and you've also got to look at the timing in the market - what time of year you sell and buy is going to influence the desirability and the prices that you pay.
Important things to consider is to do your own research, talk to the agents and see what they say, bear in mind, that if you are planning on doing some work, renovation costs, a report came out recently, have gone up 37.1% in the last five years so whatever you're going to be doing, you are going to be paying quite the top price for it and is that worth doing it then, particularly if your potential buyer is most likely going to be ripping down the property anyway.
Now why do I say that, because the next step in your research journey, I never said this was going to be easy guys. The next step in your research journey is you looking at the zoning on which your property stands.
Why is this important because, as you probably would have heard in the last number of months, the Australian Government has decided we need more properties in Australia. Yes, we do as such, the New South Wales government has decided that they are going to be changing zoning and overruling local councils and highlighting certain suburbs in certain areas for higher density zoning. That means that if you are in a pocket that has been earmarked for that kind of zoning, your buyer pool is going to change quite significantly, your mom and dad buyers are only going to be a portion of the audience, there is going to be a portion of developers there and opportunistic buyers who are thinking, okay I'm just going to rip down this property and build a duplex and live in the one side and then sell the other, or maybe even an apartment block or whatever the case may be. You can ask your agent for advice, but they may not be across all these changing plans, and they are literally coming out on a weekly basis.
My tip to you would be going on certain portals that will really help you understand the current state of play. Let me just call them out to you, jot them down and see whether your property falls in that area, and this is also super important when you're buying of course because you want to understand what's going on around the property that you're interested in.
One of them is the www.planningportal.nsw.gov.au, there they will talk about what's being proposed, in terms of planning rezoning etc. It's not talking about development applications as such but more about the different kinds of zoning etc.
The other one to look for is the. www.planningportal.nsw.gov.au/spatialviewer and this is really handy because what you do is you put your address in there, so I'm just doing it right now as we speak, and on the righthand side there'll be a ledger beside a very colourful map outlining all the different zoning. In there you'll find the height of buildings, you'll find a heritage map, you'll find the floor space ratio which is a conversion house versus the land it stands on - so how much built-up area can you have in that area.
Those are the two go to places that we look at to understand if there's anything significant going on in the area that you should be aware of. To give you an idea, we were looking at an apartment in the Inner West only last week, and in the development applications on the Inner West Council website, we found people renovating the back of the house, adding a granny flat, changing the garage, that kind of thing, but what didn't come up was something that we found on the planning portal which was a rezoning of several adjacent lots of land and they were going to be amending the floor space ratio from 1:1 to 1.75:1, and amending the height of the building controls to range from 11 metres to 21 metres - ouch - and introducing a side specific clause for the proposed B4 mixed use zone to permit a residential flat building only if it includes a minimum of 1500 square metres of floor space for a registered club and commercial premises. And then there was other things that would basically mean that the density of this, what seemed to be just a local, with a massive amount of green space, is now going to be a whole new corner of this suburb with buildings up to 21 meters. Now this didn't come up in the development application section of the Inner West Council, but it did come up in the planning portal.
Something that you really can't miss, when you are buying and selling in my opinion, and something that might not even be afront of mind from the agent side, so you can't rely on someone else to tell you this.
I would also recommend getting a really good Solicitor to draw up the contract for you when you come to selling, but also again when you're buying, get a solicitor to go through the contract with a fine-tooth comb, and ask all the relevant questions.
I hope this has answered your question, as to what I should do it comes to selling and whether I should renovate or not. Again I think ultimately it comes down to who is your buyer pool, and really being able to look at your property in the cold light of day and going is this as good as it could be, and is it actually worth making it as good as it could be if it's going to be torn down anyway.
Hope this helps. A bit of a different angle today. But as I always say, ‘knowledge is power’.
Make sure you make yourself familiar with the www.planningportal.nsw.gov.au website. It's a wealth of information. Be mindful that this is only a snapshot in time, and that things can change from week to week, but at least you'll have a beginning of an understanding of what's happening around you.
Thanks again for listening, please keep sending me your questions to hello@buyyourside.com.au and until next time.