A common mistake in the current market is an inability to distinguish between the actual property value and its marketability, says Re/Max chief executive and regional director Adrian Goslett.
“While size, features and the readiness of buyers to purchase the home determines value, marketability deals with its readiness to be sold and relates to the home’s condition and aesthetic appeal. When demand outstrips supply, the perceived value rises but, equally, values stagnate when there are too many properties on the market and insufficient buyers,” he says.
Understanding the basic economic principle is critical to knowing why renovations do not always guarantee a return on investment.
While a new kitchen or bathroom can boost marketability, the investment does not always correlate with buyers being willing to pay for those renovations. Goslett says sellers must avoid overcapitalising on alterations above the value buyers will pay in that neighbourhood.