This seems like a silly question considering that for someone who is renovating to sell, one would simply follow the other. Obviously, both are normally regarded as project expenses, but one of them is not a necessity while the other will get you a higher price. You may be surprised by which is which. Before you jump to the conclusion that the answer is a for sale by owner option, think again.
For those people who are sitting on the fence (pun intended) about whether they should renovate their house before selling, the following comparison may be an eye opener. There is a new kind of property marketing service offered by Revolutionary Real Estate, which could increase the profits and reduce risk of a property renovation. This may help many people to make up their minds about how to proceed.
The table below compares two scenarios for selling a cosmetically tired property with a current valuation of $550,000. It shows the difference in outcome between spending the same amount of money on either a real estate agent to sell the property in its current condition or spending it on renovations. This is a good illustration of the ‘bang for buck’ given by each of these expenses.
|Renovation VS Real Estate Agent|
|Current property value||$550,000||$550,000|
|Less renovation cost||$13,750|
|Proceeds of sale / New value**||$536,250||$591,250|
|Net cost / benefit||-$13,750||$27,250|
For illustration purposes, the table has been simplified to exclude advertising, legal costs and taxes. The $13,750 was chosen as the expense in both examples because based on the $550,000 starting valuation, it represents the most widespread commission* rate charged by real estate agents in most Australian metropolitan centres – 2.5%. For the renovation**, a return of three dollars was assumed for every dollar spent, which is well within the performance scope of any well thought out renovation.
As you can see in this example, the difference in spending the same amount of money on either an agent or renovations is a significant $41,250. You may think that if you are going to renovate and sell, you’ll have to cover both expenses, but you don’t. A professional property marketing strategist like Revolutionary Real Estate (www.revolutionaryrealestate.com.au), can help you achieve the same result that the best real estate agents would, for a small fraction of their commission.
What you save in selling costs, can instead be invested in clever renovations that add real value. This can increase your overall equity or profit, which in turn can reduce your risk. You don’t have to spend lots of money on renovations and it is actually useful to ask yourself how you can get the best results on a budget. There are many things you don’t even need professionals for. You do have a choice between the two significant expenses of real estate agents commissions and renovations. Illustrating the considerable difference between their impacts on your profit has hopefully made it obvious, which one is the wiser use of funds. Only one of them will help you achieve a higher price.
For more information, please go to: www.revolutionaryrealestate.com.au