Turnkey properties have surged in popularity among buyers keen to save time and effort, even if it means paying a premium upfront to forego additional renovations.
New data showed that buyers have been rejecting fixer-uppers, as rising construction costs and a shortage of tradespeople make renovations more difficult to complete.
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The findings from James Chase Buyer’s Advocacy founder George Cherchian also found that many families with school-aged children and demanding careers found the idea of managing a renovation unappealing.
By renovating their homes and creating live-in-ready properties, investors can aim to boost home values and maximise sale prices.
According to Richard Matthews Real Estate director, Matthew Everingham, investors interested in renovating their property before selling can talk to an agent early, look at past renovation examples, and weigh up the financial advantages.
Talk to an agent early
Everingham said investors should seek advice from agents early in the selling process so they can be as informed as possible about what upgrades are required.
“Get in there before you start doing any work – sometimes you’re doing work that is not needed.”
“I see it a lot where we see a property too late in the process, and they’ve spent money on things that wouldn’t have made a difference to them.”
According to Everingham, sellers should consult trusted agents about renovations, treating them as consultants rather than simply salespeople.
“[It’s about] clients having a relationship with an agent where they reach out and the agent provides general information, advice rather than just, ‘we’re here for the commission side of, and that’s it’.”
He said that while sellers should seek more specialised advice on costings from experts, such as builders, accountants, and financial advisors, agents can provide general insight and recommend trusted professionals to simplify the process.
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Sellers can also ask their real estate agency for their tradie book to ensure the renovation is up to standard.
“There are a couple of contacts I have that I would say get jobs every month from us – interior stylists, as well as architects,” he said.
Consider the value of renovations
Everingham said sellers should consider the financial benefits of renovations by looking at examples of other houses that have undergone work, which can be shown by an agent.
“Most owners are saying, all right, if we’re going to spend $50,000 on updating a property, we want to see that return of a hundred or $200,000 on the sale price,” he said.
“It will really come down to, what’s the benefit, how much more would we get for it, and how do we go about it?”
He said that by talking to a listing agent, property owners can weigh up the financial advantages of renovating, and be informed about how to view it as an investment.
“We look at return on investment, if we’re going to put X amount into it, what’s the likelihood of us turning 50 into 150,000?,” he said.
“For a lot of owners, if it’s their primary place of residence and they’re updating to make a turnkey solution when they sell, that’s tax-free money – so the $50,000 turns into $150,000 tax-free.”
However, for owners who are hesitating due to budget constraints, Everingham said some agencies offer loans through their funding partners.
“If there’s $30-40,000 worth of renovation, a lot of people don’t have that extra money lying around. We’re going to a third-party provider in order to help the client get those funds in order to get the finished product,” he said.
“If they can’t access the funds, if they want to do the work and they don’t have access to the funds, it doesn’t matter how much they want to do it, they just can’t fulfil it,” he concluded.