Hello, my fellow renovators! It’s Naomi Findlay here, it’s time to talk all things selling price!
Did you know I have a renovation course? You can check it out here!
Today I will be talking to you about the last step of your renovation journey – that is setting your sell price and selling!
Are you trying to work out the sweet spot for your property?
Maybe you’re worried that you might not make enough profit after counting in all of your other expenses?
Is it getting a little overwhelming trying to figure out that sell price before you have even started on your project?
Now, there might be plenty of stock on the market at the moment. Lots of four-bedroom houses just like yours. Some of them might even be renovated.
So, how do you figure out what SELL PRICE you should be placing on your house?
You know what? You have done all the hard yards already.
If you have been following my blog posts, you should already have a wealth of information at your disposal.
From working out how much your business is going to cost, to picking out your strategy and patch, you are already armed and ready.
Last time I spoke about how you would go about figuring out the cost of your actual physical renovation – if you’ve crunched the numbers already, then working out how many dollar signs you should be putting up for your property will be a breeze.
Why? Because to work out your sell price, it’s all about working backwards and include ALL of the money you would have spent that is related to the project.
Don’t have time to watch? Listen to it on-the-go here!
1. Work backwards and include ALL of your costs
When I say ALL, I mean you need to add not just the cost of the actual renovation side of things, but also all the other money you have spent getting to the renovation part. I’m talking the money you’ve paid the lawyers and accountants when setting up your business., the loan repayments, that hefty stamp duty, everything.
Just be sure that you are including costs that are relevant only to that project.
There’s no point trying to include the loan repayments from the home you actually live in, because that will just throw your calculations out of whack. Remember, you are trying to make a profit from your project, which you will then be able to use on your own home’s loan repayments if you want.
If you had a lawyer help set up your business, you would probably include that cost in your first project. But if you don’t incur any business-related fees later on from him, you probably wouldn’t include that cost in your later projects.
You would include any conveyancing costs, but because you would have already covered your costs with the profit you made from the first project, you don’t need to factor it in a second time.
Your accountant, on the other hand, will probably be doing your taxes for you every year. So, you will include his fees in each one of your renovation projects because those costs are ongoing.
Because the only way you can make a clean profit is to make sure all your expenses have been factored in.
2. Look at similar properties to yours
Now, I spoke about this briefly in my post about how to work out buy price.
What I mentioned there was that you needed to look around at the surrounding properties that were selling. This would definitely be one of the simpler steps to do.
So, let’s explore this a little more in depth.
Before you start looking at similar properties, you need to have a clear idea of what your finished product will look like.
Are you replacing the kitchen and the bathroom? Will there be a new entertainment area? Are you converting the living space into an open plan haven?
On top of these renovations, you also need to know the level of finish you will have. Are you going for laminate or granite benchtops? Will the entrance hall have a vintage chandelier hanging from the ceiling or will there be LED lights? Is the security system going to be a simply alarm or an iPad controlled high-tech creation?
All of these things should be factored in when you are looking at other properties on the market.
You wouldn’t compare apples to oranges, and the same goes for properties.
Yes, they may both be 3-bedroom Victorian terraces with updated kitchens. But yours might have a French provincial with state-of-the-art appliances while the others are just Ikea flat pack kitchens with run-of-the-mill appliances. And that makes a world of a difference.
You can pull up an online database like realestate.com.au or Domain and have a look at the stuff that has sold in your patch recently. Remember, there’s not really any point in looking back at data that’s a year old. The market, especially in cities like Sydney and Melbourne, changes way too quickly for that to be a good guideline. Plus, you don’t want to base your final profits on that, when you could potentially make way more in the present day.
The exception to this “don’t look at old data” rule is when there haven’t been many sales in your area. Maybe it’s a semi-rural area, and there aren’t that many houses to begin with. Or maybe the houses that have sold have been so varied that there’s only one that was similar to yours.
If that’s the case, it can make it hard to get an accurate measure and you may actually have to look at the older stuff.
Then you would need to add in dollars to bring the price up to date with the times. My Rapid Renovation Formula has an awesome tool to help you figure this out quickly and easily.
3. Get an agent’s opinion
This is the part where you pull out your big guns.
A good connection with a real estate agent is SO important. After all, it’s part of their job to know the market. And an agent that is good at his job will hold a wealth of knowledge when it comes to your property patch.
While you’ve been busy looking at property leads and talking to agents, you would have made a few connections along the way. These agent friends will be great at helping you find a good price point for your recently renovated baby.
If they’re already a connection and they know that you aren’t in this as a once off, it will be in their best interest to help you figure out an accurate sale price.
On the other hand, if you haven’t known them for very long or have just approached them out of the blue, you might find that the numbers they’re throwing at you don’t match the ones you have seen in your online database searches.
If that’s the case, they’re probably looking to snatch you as a client with their gift of the gab.
So, find yourself some good real estate buddies, and you will make your renovation journey run a heck of a lot smoother.
And there you have it. As long as you count all your costs in and compare with the right properties, you will be on your way to a winning sell price.
Are you interested in selling property? Check out more here!