A changed climate means that ostentatious extensions won't add value to your home, writes EDEL MORGAN
BACK IN THE boom, homeowners were bombarded with advice on how to add value to their property. Common dilemmas included whether an attic conversion or an extension would be the best long-term investment, or if landscaping or paving the rear garden would attract more buyers when the time came to sell . . . at a large profit.
Now, in an uncertain market where property is hard to value, homeowners can be priced out of the market if they take on any major improvements.
It’s difficult to add value to a property when you don’t know how much the property is worth in the first place.
With an absence of a reliable price index to guide vendors, it’s not unusual to find similar houses on the same street with wildly varying asking prices.
According to estate agent Barry Flood from Lisney, while once there was serious profit to be made from renovating a house for sale, “there’s not that much of a price gap any more between properties in bad and good condition”.
“If you do major improvements to your home in order to maximise sales figures, you are probably not going to get the return,” he says.
The subject of adding value has been in the media spotlight of late with the publication of Phil Spencer’s Adding value to your home. The presenter of Channel 4’s Location, Location, Location has appeared on Irish TV and radio – but how relevant is his book to the Irish market?
In chapter one he says investing in your home means “it can be the most attractive home on the block – so if you decide to move, yours will get the most attention from buyers and usually sell quicker and for more cash”.
This is not necessarily the case in the Irish market where investing too much in your home when you are putting it on the market can backfire.
He does say that some projects offer a more clear-cut return than others. “While many home improvements add to the saleability of a property, the cost of the project does not necessarily always add an equal amount to the asking price.”
The difference is that vendors in the UK have help establishing the value of their property. There are a number of price indices and websites, like mouseprice.com, which trawl the UK land registry to provide homebuyers with comprehensive and recent information about property prices.
The UK market is also showing signs of recovery with prices increasing by 1.6 per cent in the first three months of this year compared to the previous quarter.
With the fall of house prices in Ireland people are not only seeing a dramatic drop in the value of their homes, but also of any expensive building work like extensions and renovations. “They would have paid top price for a builder, for suppliers and architects,” says Iris Keating of Douglas Newman Good.
In Adding Value to your home, Spencer lists various improvements and how much they can enhance value, including extensions at an average of 11 per cent. A loft conversion is estimated to add 12.5 per cent.
In the Irish market, it’s questionable whether an extension or loft conversion will add value at all. It depends on how long ago they were built and the quality of the workmanship. If done well they’ll increase saleability but the vendor might not recoup the cost of the work.
A poorly executed extension can detract from the value and put buyers off. “A lot in this country have been built very poorly with a flat roof, a single storey and they cost a lot to replace,” says Flood.
The most active group in the market are first-time buyers who – unsurprisingly – are looking for a bargain.
“If they buy a two-up two-down and there’s no space to extend, then it has to be in very good condition, or if it’s in poor condition there has to be that extra bit of value to take on the hassle and risk aspects of doing work,” says Iris Keating.
Trader uppers are also prevalent in the market and are also looking for as many boxes ticked as possible for their money.
In the boom days, selling property was all about successfully conveying a lifestyle. Vendors installed luxury items, such as espresso machines, to send the message that upwardly mobile, cosmopolitan types live here. Now it’s back to basics, and spending money on expensive gimmicks appears inappropriate.
David Ashmore from Savills says the best advice if you’re going to market and thinking of spending to add value is: “Don’t.”
“The best thing is hard graft, preparation, tidying out and spending time and energy cleaning so you are putting yourself in the very best position.
“Quite often, it’s a time, rather than a money, factor. Photos are very important. If it’s a beautiful sunny day and you have a camera, get out and capture it rather than sticking with early spring pictures. That sort of thing definitely helps,” he says.
While she agrees hard graft is the way to go, Iris Keating says you shouldn’t spend too long doing it. “Don’t do anything where you are going to be spending weeks and months.
“You need to move before the market falls further. We are talking about what you can achieve over the course of a weekend.”
She says buyers are finding it more difficult to get funding or top-up loans to do refurbishments so anything you can do to smarten up a tired property will help.
“The best thing is to clear it out, cut back the garden so you can see it and walk through. If the house is tired, do a bit of painting. Re-tiling the bathroom or sprucing up a kitchen is well worth doing. For the most part though, when it comes to renovations, leave the new buyer to do that.
“Kerbside appeal is hugely important. If there are three or four houses for sale in an area you want to be the one that jumps out. It might be a case of painting the front door and windows, putting in window boxes and miniature trees. But make sure you follow through into the house, and that it’s clean and freshly painted.”
