How to spot a home with potential
POTENTIAL is a hugely popular term in real estate. How many times have you heard claims from agents about a home’s potential? Are you in fact a vendor selling a property with potential right now?
Surely this potential must attract a buyer and must add value? Well, there is one form of potential that does attract the astute buyer – that is “hidden potential”.
This takes the form of a benefit a property may have that the vendor or agent is either not aware of, or does not understand. Examples may be changes in an local zoning not yet publicised or perhaps an adjoining property will allow for development and the astute buyer has control of that neighbour.
It may even be something as simple as being able to see through the shockingly bad architecture, or design and know a fantastic home could be easily created, where others have walked away.
But hidden potential is not what I refer to here – it is the good old fashioned potential that sellers and agents are fully aware of and which always benefits the buyer.
So typical potential could be something such as a space to create car parking, or a garage in an urban location, perhaps the chance to sub divide the block, or develop the site further.
It could be nothing more than varying the floor plan to create a second bathroom; or knowing how easy the floor plan could be changed to meet buyers needs.
Often the most common ones are how good the kitchen, or bathroom could look if they were refurbished. Many buyers are attracted by potential that is why it is such popular and well used term; but it will not necessarily add substantial value to the property.
How can you actually see a real tangible financial benefit with your property’s potential, without fully utilising that potential and all the time and money that will cost?
The answer is actually quite simple. Just stop the potential being no more than conjecture and speculation. Make it factual.
Buyers naturally have a tendency to overestimate the costs of realising a homes potential and this can scare them off. It’s fully understandable of course.
So your current kitchen that is absolutely hideous in the mind of a potential buyer will be an additional $15,000 minimum spend to get it right. However, a kitchen company could supply you with a costing, drawings and plans and state an actual figure.
The development opportunity of your land, will only be fully realised if you have professional drawings showing, new fence lines, access points and draft plans that meet council requirements for developing the site. The new parking space should have plans too and a costing.
So the moment you or your agent identify that your home has potential, whatever that may be, don’t just believe you can sell the dream for thousands more with nothing but a bit of verbal. It is not something that can be brushed aside and expect buyers to happily pay more.
If you cannot or do not feel it is viable for you to undertake the improvements, do your homework at least to back up these claims of potential with a costing, a plan and as much detail as possible.
The more effort you put in the better chance you have of actually generating a tangible value gain for your property. In my experience the more facts you give the buyer about potential, the more they are likely to take that potential seriously.