Myth: all upgrades will add value to your home.
Fact: you may never recoup the full cost of some upgrades.
If you’re hoping to increase your home’s value before you sell (above and beyond the cost of an upgrade itself), you should know that some updates that are valuable to you might not be to potential buyers. Here are the most common upgrades that cause homeowners to lose money:
Putting in a pool: pools can be hit or miss when it comes to added value. You may see some return, but often it’s not enough to pay for the pool itself. Adding a pool to your home could be a major turnoff to some buyers. Buyers with small children may be concerned about the safety risks, those looking for a low-maintenance yard won’t want to deal with the hassle and upkeep of cleaning a pool, and buyers who are on a tight budget may not have the extra cash to deal with the added expense.
Custom design decisions: your idea of a dream kitchen probably isn’t everyone’s idea of a dream kitchen. Unless you are planning to remain in your house for years, think twice about renovations that are too personalized. If you install a kitchen backsplash, you might recoup the cost, because the difference between ‘no backsplash’ and ‘backsplash’ is noticeable. But the specific type of tile might not matter to buyers. Choosing a beveled countertop edge that’s complex and ornate, rather than a basic beveled edge, can turn off buyers whose tastes don’t align with yours. These custom features may wind up costing you come listing time, as many buyers will factor in the money they’ll need to spend to change the house to suit their own tastes. If you’re going to upgrade your kitchen just for the sake of selling, stick with neutral, builder-grade design decisions.
Room conversions: buyers will be looking for some basic staples when they tour your home: typically, three bedrooms, two bathrooms and a garage. Getting rid of these expected spaces (or altering them into something unusual) may harm your resale value. Every bedroom is coveted space that can bump your listing up into the next bracket. Buyers are looking for a two-bedroom, three-bedroom, or four-or-more-bedroom home. You might not need that extra room and dream of knocking a wall down to create a giant walk-in closet. Unfortunately, most buyers likely won’t share your interests. Instead, they prefer an extra bedroom for children or guests.
Incremental square footage gains: sizeable square footage gains—like finishing your dingy basement so it becomes an additional livable floor—can be a boon in buyers’ minds. But tiny, incremental changes may not give you much of a return on your investment. Adding square footage in a way that doesn’t flow well with the floor plan can backfire. Sure, a half bath on the first floor would be useful, but if buyers have to pass through the kitchen to get to it, the half bath loses some of its appeal.
Overimproving: no one wants to buy a megamansion on a block full of split-levels. When your upgrades feel overboard for your neighbourhood, you alienate buyers on two fronts: buyers who are drawn to your neighbourhood won’t be able to afford your home, and buyers who can afford a home of your caliber will prefer to be in a ritzier area. Keep the ‘base level’ of your neighbourhood in mind. Tour some open houses on your block to see how your neighbours’ kitchens look before you invest a small fortune in granite countertops and high-end fixtures. Being a litter nicer than other houses around you can be a selling point, but being vastly more luxurious is not. Pursue these upgrades for your own enjoyment—but don’t trick yourself into believing you’ll more than recoup the cost of the improvement in the form of additional home value. You can always opt for the projects that have the best potential to draw in a buyer instead!
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