Renovation is supposed to be a form of “asset enhancement”. But does that mean you should renovate before trying to sell your house?
Understanding how renovations affect sales
The impact of renovations are not the same across all properties. Here are four broad situations to consider.
The “worst house in the best place” scenario
The property is old and run down, but is located in a prime area (e.g. District 10, next to the neighbourhood mall, or right next to the MRT station).
In these situations, buyers are attracted to the property because of its location. There’s likely to be less return on renovation costs, as buyers are interested regardless of how pretty (or hideous) the house looks. For example, before it’s sold en bloc for redevelopment, Peace Mansion may have appeared old and worn, but the property was highly desirable to many, given its location near Dhoby Ghaut and Little India.
The “best house in the worst place” scenario
A reverse of the above. This is when the location is not very desirable, so the property has to be extra nice to make up for it. In these scenarios, renovations can have a better pay off, but you still need to control the spending carefully.
The “typical house in a typical neighbourhood” scenario
In a scenario where your property blends in (it is not especially better or worse than surrounding units), small renovations to add a differentiating feature can pay off. This is the situation that many typical flat or mass market condo owners find themselves in.
The “home in a hot market” scenario
This happens during bull periods in the property market, when buyers are eager to buy a house before prices rise further. In these situations, you can probably get a good price even with less renovation work, because buyers are already intent on buying a property.
In any situation, full-blown renovations are almost never worth the cost
By full-blown renovations, we refer to amounts in excess of S$50,000 (or S$80,000 for landed properties). You’ll almost never recover these costs as part of the sale. New owners won’t pay that much for it, because they probably intend to replace it all anyway if it doesn’t suit their needs.
According to Mr. Alfie Soon, who has been a general contractor for over a decade:
“So many times we’ve torn down a brand new toilet, new kitchen, new living room. We can see it’s all new, everything working. The last owner only just renovated. But the new owner still wants to tear it down. Very common. So if you ask me, no point to do it up so nice before selling.”
A property agent we spoke to, who asked not to be named, said buyers almost never care for renovations. She remarked:
“If you are going to buy a house, I believe you have already prepared to spend for renovations. So since you are going to renovate, will you still pay another S$50,000 for the existing reno? I don’t think so. For sellers, as long as the house looks presentable, that is enough.”
So should you renovate? The answer is “yes, but…”
Renovating can help your home sale, but there are some limitations to know:
- The renovations should be aimed at presentability
- Never renovate based on your aesthetics
- Save the renovation for specific rooms
- Consider fixing the budget to the desired sale price
1. The renovations should be aimed at presentability
Virtually every property agent we spoke to agreed on one thing: renovations are important so that the house looks presentable, but anything beyond that is a gamble.
This means it pays to make small changes such as:
- Repainting the walls with neutral colours such as white, beige and cream
- Removal of warped or rotted carpentry (as an alternative, just hack it all away and leave the space open)
- Changing damaged doors, or door hinges if they are sagging
- Covering up notable cracks, holes or any exposed wiring
- Replacement of discoloured surfaces, particularly false ceilings or faded / stained wallpapering
- Plugging up any leaks
You’ll notice these are more akin to maintenance than actual renovations.
2. Never renovate based on your aesthetics
Ask your property agent or interior designer what’s trending, and what they think can help your sale. Don’t base the renovations on what you feel is interesting or good-looking.
Remember, the renovations are not for you, and you won’t be living there shortly. It doesn’t matter if you think the minimalist style is cold and ugly. If that’s what will help your sale, that’s what you should consider.
Renovated properties for sale
3. Save the renovation for specific rooms
In order of priority, these are your kitchen and bathrooms. Don’t worry too much about the bedrooms or living room. Those areas are expensive to renovate, and buyers probably have their own plans for them.
As with point 1, the emphasis must be functionality. There’s no need to get Italian marble countertops for the kitchen, but you do need to make sure the sink, stove and water taps are all working. For bathrooms, it’s sufficient to ensure that bathtubs are not covered in scratches (if you have one), and that the plumbing and water heaters all work.
4. Consider fixing the budget to the desired price
Your property agent can give you more advice on this, but you might want to peg your renovation budget to the desired price.
For example, say you want a minimum of S$600,000 for your flat. However, you’re pushing for a desired price of S$635,000.
You may decide that, out of this amount, you are okay to spend S$15,000 to S$20,000 on renovations. That will still leave you with S$615,000 if you get the desired price. If your seller tries to haggle (which they will), you have S$15,000 of “wiggle room”, to ensure the renovations at least pay for themselves.
Ultimately, the amount you should spend on renovations varies for each individual property
There are no hard and fast rules. As we mentioned earlier, everything from the surrounding properties, to the state of the property market and the types of viewers your agent brings, can impact how much you should spend on renovation (if at all).
Consult with your property agent on whether renovations are worth it. And if the budget is tight, know that it isn’t always a bad idea to sell without renovations.
Planning to sell your house soon, unsure on what to do? Let us connect you with a property consultant.
If you found this article helpful, 99.co recommends 5 renovation tips and trends that can destroy your property’s resale value and 15 ways to dramatically increase the value of your property before selling it.
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