Keeping an eye on how your renovations will affect your home’s value is a smart plan. The trick is to know which ones increase your home’s value, which renovations do not matter at all, and which might actually prove to be a liability.
It’s all too easy to get sucked into a big project that doesn’t pay off when it’s time to sell. Renovations you find perfectly charming may be irrelevant or even undesirable to potential homebuyers—leaving you stuck with the bill for pricey upgrades that won’t pay off in the end.
With that in mind, don’t head into any of these projects with the expectation that you’ll recoup your money or increase the value of your home:
- Carpeting: The days of wall-to-wall carpet are over; homebuyers today want sleek hard flooring. With carpets come concerns about the environmental and health risks of the chemicals in carpets and padding, as well as allergens.
- Internal upgrades: A new roof, plumbing system or air-conditioning unit might be a major expense and upgrade to you, but potential homebuyers won’t pay more for your home because you’ve installed them. Buyers expect these systems to be in good working order and consider repairs and eventual upgrades part of routine maintenance, rather than added value.
- Over-improvement: It’s rare to find a buyer who wants to buy a $250,000 home in a $150,000 neighborhood. In general, homebuyers want a house that’s right in the middle of the values of surrounding homes. A drastically more expensive home will seem overpriced.
- High-end upgrades: A kitchen full of high-end upgrades won’t boost the value of a house if the rest of the home offers mid-range or older, obsolete features. Buyers will focus on how much work they’ll still have to do, not how much work you’ve already put into the home—especially if your upgrades push up into over-improvement territory.
- A swimming pool: Many homebuyers consider swimming pools to be a liability: expensive to maintain, dangerous to pets and children, and ripe for lawsuits in case of accidents. A good number of buyers will automatically reject any home with a swimming pool for these reasons.
- Extensive landscaping: The garden you labored years to cultivate is likely to be viewed as a money-gobbling time sink by many potential buyers—yes, even if it’s so attractive that it increases interest and buyer traffic to your home.
- Special purpose rooms: Turning a bedroom into a gym, library or wine cellar is risky if you can’t easily convert it back when it’s time to sell. Potential buyers may not share your interest, and will most likely not be uninterested in spending the money to remove your changes.
- Garage conversions: Most people want a garage for their vehicles and for outdoor equipment like lawnmowers, snow blowers and garbage cans. Rendering your garage inaccessible for these uses takes away a valuable component of your home.
- Interior design upgrades that clash: If your home is a country ranch rambler and you renovate to a stark contemporary look, expect potential buyers to be taken aback. Few will want to take on a home featuring such a clash of styles.
- Irrelevant financial figures: Homebuyers won’t pay more for your home based on any of the numbers that might be significant to you and your own history with your home; including how much you paid for the home, how much home equity you have, how much you need from the sale of the home, how much other homes in the neighborhood are selling for, or even the home’s tax assessment or appraisal value.
If you’re interested in buying or selling a home, take a look at our Real Estate Rewards Program.