Making money through renovating is a science, not a fluke. Our renovating expert Cherie Barber shares her formula for success.
There are some properties that seem to defy the market highs and lows, and are quickly snapped up in any market. Why? Because it’s a property that lots of buyers want – simple as that. And for any professional renovator, that’s your ultimate goal when you’re buying a property to renovate and sell.
For anyone looking to make money from buying and renovating property, you need to follow a strategic plan - from the moment you decide to buy a property and begin your research, to the day that property is sold. Here’s a quick crash course in what to do – and what to avoid.
1. BUY A PROPERTY THAT MEETS BUYER DEMAND
Professional renovators who buy, renovate and flip for a profit, know in advance what buyers in their area want. They’ve done their research and are on the hunt for properties they know can be cost-effectively renovated to meet that demand. You need to think like the pros. This requires expert market knowledge in your target suburbs, and an intimate understanding of who the buyers are and what they want. The higher the demand for a certain property type, the higher the chance of exceeding your resale expectations.
2. AVOID BUYER OBJECTIONS
A “buyer objection” is something that a potential buyer doesn’t like about a property. Some problems can be fixed, others you can’t do a thing about. For example, dark, gloomy interiors could be fixed by improving the internal lighting. However, there’s little you can do if the property is on a noisy main road. Don’t buy a property that has a major buyer objection that can’t be fixed. You may pick it up cheaply, but guess what – your buyers will equally expect a bargain when you resell and your fancy renovation will have been in vain.
3. RENOVATE WITH WIDE MARKET APPEAL
Don’t aim to win any design awards with your renovation project; selling it for a profit is all you’re after. Choose a colour scheme that is modern and timeless, simple fixtures and fittings that look good but don’t cost the earth, and an overall look that has wide buyer appeal. Buyers need to imagine themselves living in your property, so create a neutral setting that lets the new owner add their own personality.
4. GET READY FOR SALE DAY
You get one chance to make an impression, make it a great one. Remove clutter, wash the property, do repairs, eliminate odours, make it light and airy and attend to anything negative that could turn buyers off.
5. ENGAGE A GOOD AGENT
A good agent will get you the highest possible price within a reasonable time frame. Choose one with excellent local property knowledge, a proven local track record, good negotiating skills and a database of genuine buyers. Ask if you can speak with the owners of the last three properties the agent sold. If the agent is not forthcoming with these details, alarm bells should ring. And never sign an agent’s contract for any longer than 45 days. This gives you an out, sooner rather than later, if they fail to measure up.
6. TIME YOUR SALE CAREFULLY
There are good and bad times of the year to list your property. Spring is always popular, but that can mean the market is suddenly flooded with properties, leaving buyers to pick and choose. In winter, fewer properties are available, giving buyers less choice. November to January is generally not a great time, as inspection numbers dwindle. Also, auctions wind down in the lead up to Christmas and generally don’t start again until February. Discuss timing of the sale with your agent, weighing up the pros and cons.
7. MARKET PRICING
Know what your property is worth, not what you’d like. Most homes that don’t sell in their first listing period are priced too high. Others that sell quickly may have been priced too low. Pricing your home correctly is critical, so ensure you have a detailed conversation with your agent about pricing strategy – including whether auction or private treaty is the way to go. And don’t just go on the agent’s word. Do your own research so you know what similar properties to yours are selling for.
8. LIST EXCLUSIVELY
Placing your property with several agents doesn’t increase your chances of finding more buyers. Listing exclusively creates loyalty and the ability for an agent to get the best price for you, rather than multiple agents trying to sell quickly at a lower price.
9. AVOID MARKETING COSTS YOU DON’T NEED
Most agents will attempt to sell you the premium marketing package when it comes to selling your property. Forget it. All you need is a good signboard (your 24-hour salesperson), a brochure with floor plan and a fantastic internet advertising presence. Online is where it’s at!
10. ENGAGE A PROPERTY STYLIST
The pros know how to present your property to appeal to the widest possible audience. They show buyers how a room can be set up. And they know how to tap into a buyers’ emotional side – the one that says, “I want this property”. It’s pricey, but I think professional styling is one of the greatest returns on investment you can make. It can add tens of thousands of dollars to your final selling price and help your property sell faster.
11. PERSONALLY PREPARE FOR OPEN FOR INSPECTIONS
Before every open for inspection, take care of the details yourself. Do not leave this to the agent. Turn on all lights, open blinds and windows, light scented candles, place flowers around the place, flick on the funky tunes, sweep leaves off pathways, etc. You want your property looking A1 on inspection day.
12. MAKE IT EASY TO BUY YOUR PROPERTY
Accelerate the contract exchange process by having a building and pest inspection report completed by a credible organisation, with copies available at the open for inspection. And be open to all reasonable requests from potential buyers - extended settlement, immediate access, a smaller deposit, etc – especially in a slow market. If you’re getting a price you’re happy with, why sweat the small stuff? Go for a win-win.
These are just some of the ways to ensure you get the best price possible for your renovated property. Even in a hot market like we’re seeing in many areas of Australia, you want to have the edge on your competition and make sure you get top dollar. In my three-day workshops, I teach people all aspects of the art and science of renovating for profit, using a highly disciplined step-by-step strategy.
Get more information at renovatingforproft.com.au