17th June 2009Since our place is almost within our grasp, why not this time around, we talk more on about renovation with different angle and view. Its important for us to know the tips and ways to make sure the value of our home after renovation does not drop when you are expecting to go up.
Many house owners have the tendency to renovate their new homes exceeding their original budget. It is common to see that house purchasers of newly completed schemes in Penang are “competing” each others in home renovations. Some common renovations visible in Penang’s new residential areas are demolition of front car porch and replaced with a bigger car porch to accommodate two or more cars, hacking down the entire front terrace and facade (without balcony) and replaced with a much bigger car porch incorporating a balcony, extending the rear portion of the house to accommodate a larger kitchen etc.
We have seen house owners carried out major renovations to their houses to the extent that the renovation costs exceeding the purchase price of the house.
Renovations do not always translate to an increase in the value of your home. However, if you’re planning to sell sometime in the future and want to ensure you get the most ROI (Return of Investment), it is important to assess the value renovation. Below are several ways to optimise the cost-value ratio and achieve maximum ROI for your renovations:-
Avoid renovations with too much customization of personal liking and taste.
If the major renovations and home improvements are customized design to suit to personal liking and lifestyle which is not commonly acceptable in the marketplace sometime in the future, you may not get much of a return when you sell as potential buyers may find these renovations are not value-added renovations but rather owner’s own personal indulgence and lifestyle. Potential buyers may also view it as a liability because he may have to spend more money to change or renovate again.
When choosing tiles, countertops, paint, cabinet doors, kitchen appliances and awnings, go with colors that will stand the test of time even as fashions come and go. Conventional or classic home designs are still the ideal for home renovations because such designs never go out of style and will always attract buyers when you are ready to sell your home.
Retain the essence of the original design ambiance
Avoid excessive renovations such as changing the structure of house from the original two storey house to become a three storey house or demolition of a front porch and facade and replaced with a totally new design super large car porch with a balcony. Such major renovations could have materially changed the external facade of the house and may render the house no longer blend in with the design ambience of the neighbourhood and this may affect the saleability of the house.
Summit proper building plan for new extensions
Check with the building department of the local council MPPP or MPSP and obtain a copy of building approval guidelines. Engage a licensed draftsman or architect to ensure that the extensions are in compliance with the building guidelines by the local authorities.
A property valuer, when assessing the market value of a house, will give due consideration and only accord full value computation for properly constructed extensions with valid approvals.
Value-neutral or value-added renovations
Ascertain whether the renovations to be carried are value-neutral or value-added renovations. Upgrading cement floor with homogenous floor tiles, modernizing a kitchen or upgrading the kitchen into wet and dry cooking area, improving home security system are regarded as value-added renovations whilst demolition of front terrace and house facade and rebuilt it with a large balcony, adding a swimming pool or building a sauna or long bath, reducing the number of bedrooms to less than three are considered value-neutral renovations.
Very often when house owner decides to sell off his house, they tend to overprice their properties as they calculate their asking price by factor in all the costs incurred during and after acquisition of the house ie. purchase price plus all incidental costs such as payment of legal fees and stamping charges plus renovations costs, bank interest charges incurred plus exit fees or penalty charges for termination of loan agreement within the lock-in period (if any).
The true fact is that total cost spent on the particular house is NOT necessarily equate to the market price of the house. In an active and uptrend market, house prices tend to go up higher than the total acquisition costs. Conversely, in a weak or depressed market, house prices may go down and fall below the total acquisition costs of the house. The market price of the house is very much influenced by the prevailing economy conditions and market sentiments and more specifically relates to the demand and supply of similar houses in the local area.
Source: Izrin & Tan Properties Sdn. Bhd
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