When you purchase a property as an investment or to live in, you may not immediately be giving much thought to its resale value.
Of course, your goal is to make a profit from the property eventually
However, most property investors don’t realise that it’s the decisions they make at the beginning, when they’re buying a home, that can have the most impact on their property investment’s value when it comes time to sell.
The reality is such that all of the factors and decisions that you sweated over when buying, can really come back to bite you when you are ready to move on from the property for whatever reason.
That’s why it is so important to know exactly what you can and can’t control when it comes to a property’s resale value – and more importantly, what you can do to maximise your profits.
I’ve broken it down for you as a guide.
Whether you’re ready to sell and you’re preparing your property for the market, or you’re preparing to buy and you want to know what to look out for at the outside, this list can be an invaluable tool in helping you to protect your property’s resale value.
What can you control?
1. Curb appeal
The way a house looks from the street matters – a lot.
First impressions really do count; you need to make your property stand out for all the right reasons.
While there may not be much you can do about the physical structure of the property, there is much you can do to improve even the most basic and boring property’s appearance, with fresh paint, a clean roof and clever landscaping.
Lime green paint and shagpile carpet may not seem like a big enough issue to kill a property deal.
But here’s the thing: your job is to find a buyer willing to pay top dollar.
For that to happen, the buyer needs to be able to picture him or herself living in the home.
The general rule for presenting the interior of your property is to keep it clean, uncluttered and stylish in neutral, appealing colours.
If you don’t have an objective eye for this type of thing, it could be worth using a professional stylist or home staging expert.
There are a lot of things you need keep on top of when you’re marketing a property for sale, which can quickly become overwhelming for a vendor.
The behind-the-scenes jobs like replacing a broken heating/air conditioning system, fixing a leaky roof or addressing faulty electrical wiring is so important, because they can make all the difference to a buyer, and tip them over the edge from making an offer to moving on.
Aim to rectify the most visible and important issues as a first priority, leaving non-essential repairs until last.
4. Extensions and home improvements
Renovations and extensions can improve a property’s value – but only if they are done properly.
A half-finished DIY renovation out the back is not going to help you get top dollar for your house; in fact, it could even detract from your property’s value.
No prospective buyer wants to take on the liability and cost of rectifying someone else’s property issues, so make sure you finish all DIY projects off to a satisfactory standard before marketing the property for sale.
As a seller, of course, you want to get maximum dollar, while the buyer wants a bottom line bargain.
If your property is priced significantly higher than other comparable homes on the market, then prospective buyers won’t even give you a chance.
This can lead to the listing sitting on the market for months, which can actually devalue your property’s perceived appeal and value to buyers.
Follow your agent’s lead here, to ensure you don’t price yourself out of the market with an inflated asking price.
What can’t you control?
Here’s a scary thought: while the above factors are within your ability to manage, there are also a lot of factors that are out of your control when you’re looking to sell.
There’s not much you can do about it if you already own a property with one of these issues, but it pays to be aware of the potential problem, so you can try to take steps to neutralise it – and so you can take a realistic view when trying to determine the market value of your property.
1. Living on a flood plain
As Queensland and Victoria have experienced in recent years, many of our cities are built on flood plains.
Many cities have now assessed the different streets and suburbs to identify the flood risk for that area.
If your property is located in a high-risk area, it may turn off some buyers.
1. Neighbours – If you have neighbours who are obvious hoarders, late night partiers, excessively noisy, intimidating and/or maintain a terrible curb appeal, it could hurt your resale value.
2. School zones – With the MySchools website giving house hunters the ability to locate streets that fall within high performing school zones, house prices are being affected.
Young families in particular are willing to pay a premium to ensure their home is in a favourable catchment area.
3. Crime levels – The more crime in your neighbourhood, the higher the premiums are for car and home insurance and this can affect property value, as well as people’s perception of safety for living in that area.
4. Location – While living close to shops, schools and public transport can work in your favour, the associated foot traffic and noise pollution can also work against you if you get too close to the action.
Even within the same suburb, certain parts perform better than others.
5. Unsavoury history – If your house or apartment is associated with a tragedy or has been the scene of a crime, it could keep buyers away.
3. City Planning
Changes to your neighbourhood such as rezoning to industrial or commercial can significantly affect the resale value of your property.
A new road being built or a mobile tower would also have a particularly negative effect.
A lack of off-street or private vehicle parking not only means increased car insurance premiums, but it leaves your vehicle vulnerable to the effects of storms and theft and it decreases the all-important storage space in your property.
5. Strong competition
If the market is flooded with other properties that are just like yours, it is going to be harder to stand out in the crowd, especially if they are priced lower than yours.
Both the buyer and the seller have an agenda when it comes to a property transaction.
Buyers naturally want a bargain, and as the vendor, the aim of the game is to get the best sale price possible – which means you need to be proactive about giving yourself the best possible chance of selling.
Knowing the factors that influence your property’s value, and being able to neutralise the negative impacts where possible, is a valuable tool for all investors.