Just because you upgrade doesn’t necessarily mean you’ll profit from it.
Myth: All upgrades will add net value to your home.
Fact: You’ll never recoup the full cost of many types of upgrades.
You’re welcome to make any upgrade to your own home, for the sake of your own enjoyment. But that doesn’t mean you’ll profit from it.
If you’re looking to make improvements that will increase your home’s value (above-and-beyond the cost of the upgrade itself), you should know that some upgrades that seem valuable to you won’t necessarily seem as valuable to potential buyers.
Here are five of the most common upgrades that actually add less value to your home than the cost of the labor and materials:
1. Putting In a Pool
Pools can be hit-or-miss when it comes to value added. You may see some return for this renovation, but often not enough to pay for the pool itself.
Adding a pool to your home could actually be a major turnoff to some buyers. Buyers with small children may be concerned over the safety risk. Buyers 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 won’t want to deal with the expenses that are incumbent with pool ownership.
If you’re in a warm-weather climate where people are inclined to use a pool year-round, you’re more likely to get a favorable response from buyers. But that doesn’t necessarily mean you’ll profit from a pool installation.
Besides, let’s not forget — if you own the house for a number of years, you’ll need to operate and maintain the pool yourself, and this comes with an enormous extra cost. Your likelihood of recouping the money that you spent on maintenance, in addition to the installation costs, is pretty low.
2. Highly Custom Design Decisions
Your idea of a dream kitchen isn’t everyone’s idea of a dream kitchen. Unless you plan on staying in your house for many years to come, 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 as much to buyers as you think it will.
Let’s assume, for example, that you opt for a gorgeous 2×8 gauged slate tile instead of the standard, builder-grade porcelain or ceramic. While you might think of slate as an “upgrade,” relative to less-expensive tile options like ceramic, it’s not likely to raise an eyebrow among buyers.
Similarly, choosing a beveled countertop edge that’s complex and ornate, rather than a basic beveled edge, can turn off buyers whose tastes don’t run as fancy as yours. Or it might get overlooked by buyers who don’t have an eye for detail.
In fact, 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 personal tastes.
If you’re going to upgrade your kitchen (for the sake of selling), stick with neutral, builder-grade design decisions.
3. Room Conversions
Buyers will be looking for certain basic staples when they tour your home — such as three bedrooms, or two baths, or a garage. Getting rid of these expected spaces (or altering them into something unusual) may harm your resale value.
Every bedroom, for instance, is coveted space that can bump your listing up into the next bracket. Buyers are looking for a 2-bedroom, 3-bedroom or 4-or-more-bedroom home.
You might not “need” that extra room, and you’d prefer to knock down the wall to create a giant walk-in closet. Or perhaps you’d prefer to cover the walls with soundproof foam, and convert it into a recording studio.
But most buyers aren’t going to share your interests. Most of them would prefer the extra bedroom for their children or guests.
4. Incremental Square Footage Gains
Sizeable square footage gains (like finishing your dingy basement so it becomes an additional livable extra floor) can be a boon in buyers’ minds. But tiny, incremental changes may not give you a return proportional to their cost.
For instance, building a small sunroom is a “nice” touch, but it’s not likely to drastically increase your home’s overall value. Similarly, a second family room is cute, but if you already have a living room and family room, buyers might not clamor to pay extra for the additional family room.
Adding square footage in a way that doesn’t flow well with the floor plan can also 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.
No one wants to buy a mega-mansion on a block full of split-levels. When your upgrades feel overboard for your neighborhood, you’ll alienate buyers on two fronts: buyers who are drawn to your neighborhood 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 neighborhood in mind. Tour some Open Houses on your block to see how their kitchens look, before you invest a fortune in granite countertops and high-end fixtures. Being a little nicer than the other houses around you can be a selling point, but being vastly more luxurious is not.
If you still want to pursue these upgrades for the sake of your own enjoyment, by all means, go for it. But don’t trick yourself into believing that you’ll more-than-recoup the cost of the improvement in the form of additional home value.