Home owners must pay for routine home maintenance, such as replacing worn-out plumbing components or staining the deck, but some choose to make improvements with the intention of increasing the home’s value. Certain projects, such as adding a well thought-out family room – or other functional space – can be a wise investment, as they do add to the value of the home. Other projects, however, allow little opportunity to recover the costs when it’s time to sell. Even though the current homeowner may greatly appreciate the improvement, a buyer could be unimpressed and unwilling to factor the upgrade into the purchase price. Homeowners, therefore, need to be careful with how they choose to spend their money if they are expecting the investment to pay off. Here are six things you think add value to your home, but really don’t.
Swimming pools are one of those things that may be nice to enjoy at your friend’s or neighbour’s house, but that can be a hassle to have at your own home. Many potential homebuyers view swimming pools as dangerous, expensive to maintain and a lawsuit waiting to happen. Families with young children in particular may turn down an otherwise perfect house because of the pool (and the fear of a child going in the pool unsupervised). In fact, a would-be buyer’s offer may be contingent on the home seller dismantling an above-ground pool or filling in an in-ground pool. An in-ground pool costs anywhere from $10,000 to more than $100,000, and additional yearly maintenance expenses need to be considered. That’s a significant amount of money that might never be recouped if and when the house is sold.
Overbuilding for the Neighbourhood Homeowners may, in an attempt to increase the value of a home, make improvements to the property that unintentionally make the home fall outside of the norm for the neighbourhood. While a large, expensive remodel, such as adding a second story with two bedrooms and a full bath, might make the home more appealing, it will not add significantly to the resale value if the house is in the midst of a neighbourhood of small, one-storey homes. In general, homebuyers do not want to pay $250,000 for a house that sits in a neighbourhood with an average sales price of $150,000; the house will seem overpriced even if it is more desirable than the surrounding properties. The buyer will instead look to spend the $250,000 in a $250,000 neighbourhood. The house might be beautiful, but any money spent on overbuilding might be difficult to recover unless the other homes in the neighbourhood follow suit.
Extensive Landscaping Homebuyers may appreciate well-maintained or mature landscaping, but don’t expect the home’s value to increase because of it. A beautiful yard may encourage potential buyers to take a closer look at the property, but will probably not add to the selling price. If a buyer is unable or unwilling to put in the effort to maintain a garden, it will quickly become an eyesore, or the new homeowner might need to pay a qualified gardener to take charge. Either way, many buyers view elaborate landscaping as a burden (even though it might be attractive) and, as a result, are not likely to consider it when placing value on the home.
High-End Upgrades Putting stainless steel appliances in your kitchen or imported tiles in your entryway may do little to increase the value of your home if the bathrooms are still vinyl-floored and the shag carpeting in the bedrooms is leftover from the ’60s. Upgrades should be consistent to maintain a similar style and quality throughout the home. A home that has a beautifully re modeled and modern kitchen can be viewed as a work in project if the bathrooms remain functionally obsolete. The remodel, therefore, might not fetch as high a return as if the rest of the home were brought up to the same level. High-quality upgrades generally increase the value of high-end homes, but not necessarily mid-range houses where the upgrade may be inconsistent with the rest of the home. In addition, specific high-end features such as media rooms with specialized audio, visual or gaming equipment may be appealing to a few prospective buyers, but many potential homebuyers would not consider paying more for the home simply because of this additional feature. Chances are that the room would be re-tasked to a more generic living space.
Wall-to-Wall Carpeting While real estate listings may still boast “new carpeting throughout” as a selling point, potential homebuyers today may cringe at the idea of having wall-to-wall carpeting. Carpeting is expensive to purchase and install. In addition, there is growing concern over the healthfulness of carpeting due to the amount of chemicals used in its processing and the potential for allergens (a serious concern for families with children). Add to that the probability that the carpet style and colour that you thought was absolutely perfect might not be what someone else had in mind. Because of these hurdles, wall-to-wall carpet is something on which it’s difficult to recoup the costs. Removing carpeting and restoring wood floors is usually a more profitable investment.
Invisible Improvements Invisible improvements are those costly projects that you know make your house a better place to live in, but that nobody else would notice – or likely care about. A new plumbing system or HVAC unit (heating, venting and air conditioning) might be necessary, but don’t expect it to recover these costs when it comes time to sell. Many homebuyers simply expect these systems to be in good working order and will not pay extra just because you recently installed a new heater. It may be better to think of these improvements in terms of regular maintenance, and not an investment in your home’s value.
The Bottom Line It is difficult to imagine spending thousands of dollars on a home-improvement project that will not be reflected in the home’s value when it comes time to sell. There is no simple equation for determining which projects will garner the highest return, or the most bang for your buck. Some of this depends on the local market and even the age and style of the house. Homeowners frequently must choose between an improvement that they would really love to have (the in-ground swimming pool) and one that would prove to be a better investment. A bit of research, or the advice of a qualified real estate professional, can help homeowners avoid costly projects that don’t really add value to a home. <<<< Source Jean Folger, Investopedia.com >>>>
You would think you wouldn’t even have to mention that wall-to-wall is probably a mistake. I thought it was common knowledge that bare floors do better, as long as they’re in good shape and of a quality material. Hardwood floors are tops on the list, although I’ve seen tile flooring becoming more sought after.
You are right …. hardwood is always the most popular flooring if it is in good shape and not “squeeky!!”
Also carpet that is not a great colour choice can be a real negative.
I am constantly fighting this battle. I am not planning on putting a swimming pool in or anything! But I am busy bringing my under cared for home back to a well maintained house. I do worry about doing too much. I worry about doing more than I should so that I can’t sell and recoup some of the money. But I guess I’m being careful.
This is a very delicate balance between improving your home yet realizing what is the best $$$$’s to spend and recoup when you sell same! First factor in the length of time that you plan to remain in the home and then where those dollars should be spent. Good $$$$’s like kitchens, bathrooms, flooring, developing a basement and gardens are all money makers BUT not so good $$$$’s like the basics roofs, windows, furnaces, elecrical, plumbing are not good investments …. negative dollars. Don’t get me started on structural, foundation and water issues!! At the same time you have to balance spending the good $$$$’s while not ignoring those negative dollars that may need to be spent to attract a Buyer. Talk with a professional, full time real estate agent who knows your local market dynamics.
Well, I think you should also consider your future plans for the property. Some homeowners already have the intention to stay in the property for good. Some may also have resale plans.
I agree with not overbuilding for the neighbourhood. I would not be willing to pay big amount of money even if the house is worth it if the neighborhood range is way below. I am not even sure if I can sell it myself in case I wanted to buy a new house since people with a specific budget will look at places where such budgets are a norm.
If more peoplle woulld follow the advice you gave, of contacting a real estate professional when deciding on making improvements to the home they would be so much better off. But most only think of making an inquiry when deciding to sell.
One improvement to a home that I read about once, was to repaint the walls in the home to a neutral color, so that the person will be able to see their own personality inside the home, instead of the seller’s taste in colors.
That is the best choice as a paint colour and it is also wise to remove most of the “family” pics from the walls when selling the property!!
We switched out all of our flooring recently, and chose laminate. High end laminate, because it holds up better and fits our busy lifestyle better. One of those things that has to find a nice mix of benefitting us while we are still here AS WELL AS being a positive when we sell.
I can definitely see the swimming pool as a liability. Along with the reasons mentioned — including the potential danger to young children and the high cost of maintenance — the swimming pool is also taking up valuable space in the backyard.
A future homeowner may envision outdoor living, patio furniture, an outdoor kitchen, landscaping or even a place for the dog to run around. The swimming pool is an expensive and dangerous eyesore in contrast.
Thanks