Renovating

The first thing to ask is what you can afford, and factor in a buffer for cost overruns and delays.

Secondly consider whether you’re overcapitalizing with the proposed renovation, that is, spending more money on the improvements than the value they’ll add if you eventually sell your home.

Get estimates of the value of your home now, perhaps from experienced local real estate agents:

• get estimates of what the value might be once the renovations are complete – also research the market yourself
• get quotes for the proposed renovation from a number of sources
• calculate whether you’ve made a hypothetical gain or if you’ll have spent more than you’ll add in value
• consider if you’re happy with that level of capitalization or if you need to pare back the renovation.

The keys are knowing your financial limits and what the renovation will cost. If you’re using a builder, architect and/or renovation company, you should receive quotes from them on which to base your decisions. You’ll need specifications and good working drawings so builders can accurately tender for your job.

If you intend to do-it-yourself, then you’ll need to do a lot of research to determine the requirements and the likely total cost. The Archicentre cost guide could help.  

Avoid a cost-plus contract. Insist on a fixed-price contract, although there may be some provisional sums quoted in the contract to cover work difficult to estimate. Cost blowouts are the last thing you want and can be caused by delays and also misunderstandings, which need to be ironed out in the planning stage.

Overcapitalisation becomes a critical issue to consider if you’re renovating to sell and make a profit.

Tips if you’re renovating for profit:

• apart from the overall market you need to consider the individual home, the street and suburb
• some areas will always achieve higher prices than others
• don’t create a palace in an area that simply won’t attract a buyer who’ll pay the price you need
• be absolutely clear about your end goal. The more expensive fittings that you really like may not add an extra cent to the sale price
• money spent on kitchens, bathrooms, master bedrooms and the family room are often considered good investments
• renovations that create or enhance a water or bush view are also smart – provided it’s done at the right price
• check that all items such as fittings, appliances and tiles are the exact models you want, making the quote more accurate.

Architects

Architects are university-qualified building designers and project managers. In most cases they’re accustomed to handling the entire project and should have experience coordinating project teams – including builders, tradespeople, landscape architects, engineers, quantity surveyors and interior designers.

Their designs usually consider important things such as site conditions, sun and views.

The cost depends on the level of involvement you request. You may want the architect to handle the entire project or you may want to be involved and take on some parts of the project on yourself.

Tips for choosing an architect:

• make sure you get what you’re paying for and insist on dealing with a registered member of the Australian Institute of Architects
• ask to see other projects the architect has designed and managed
• speak with other owners who’ve worked with the architect
• check the architect has professional indemnity insurance so that you’re protected in case there is a claim arising from your job.

Builders

An experienced builder should have access to a range of specialised tradespeople, knowledge of materials and where to get them at the right price.

Talk to friends who’ve had work done – after all, the most important thing is seeing a good finished product and knowing it was done on schedule and on budget. If you speak with a builder who hasn’t been recommended to you, ask for the names of people they’ve worked for. As a rule, try to get at least three written quotes for the same job.

Ask yourself some tough questions.

• Am I a good project manager?
• Do I have the time and skills to research all the issues involved, including my legal responsibilities?
• Do I have the skills to physically do any of the work?
• Do I have the patience and knowledge to negotiate with contractors?

Owner-builders

An owner-builder takes full responsibility for the project.  This includes getting the necessary permits and taking on responsibility for the safety of the worksite, for you, your contractors and members of the public.

If you plan to sell the home within a certain period (check with consumer affairs in your state or territory) and the project is valued above $12,000, you’ll need Builders’ Warranty Insurance.
This is to protect the next owner from any mistakes you make.

• Consumer Affairs Victoria  
• NSW Office of Fair Trading 
• Queensland Office of Fair Trading   
• Consumer Affairs and Fair Trading Tasmania 
• WA Department of Commerce 
• Office of Consumer and Business Affairs South Australia 
• ACT Government Entry Point 
• Northern Territory Government 

Issues surrounding contracts, permits and insurances vary for each state and territory. You should check with the Department of Fair Trading or relevant body in your area.
Before signing a contract:

• check that you know the total contract price and what factors can affect it
• check that the contract states when the work will start  and finish
• ensure that the contract gives a detailed description of the work to be completed
• if there’s anything you don’t understand seek independent legal advice
• ensure the builder is adequately insured to cover mistakes and incomplete work
• check if there’s a cooling-off period in the contract (this will vary from state to state, and if you do withdraw from a contract, there may be costs to pay)
• avoid cost overruns by making sure you have enough detail in the initial brief, and that the contract is thorough, to protect you from expensive legal wrangling over unforeseen circumstances.

Anyone who has done a renovation, either DIY or through a professional will tell you that it can be expensive. You may need financial help during the renovation and insurance as well.

• ANZ Home Loans - if you need funds for the renovation then you may be able to access them through the equity in your home. If your current loan doesn’t allow you to do this then contact us today. An ANZ Home Loan specialist can help you explore your options and find the right solution to suit your needs. And remember, ANZ is Australia’s most awarded home lender¹.
• ANZ Insurance - renovating could bring with it a range of new risks. ANZ offers a comprehensive range of insurance solutions that may suit your needs. If you would like someone to review your insurance needs and help guide you through your options. Request a complimentary A-Z Review^® with an ANZ Personal Banker today.