If you want to make changes to your home, you may talk yourself (or your family members) into it by saying that any upgrade is sure to increase your home’s value. But that’s not always true. Some renovations can actually devalue your home by making it more difficult to sell.
Of course, it’s important to enjoy your home. But it’s also wise to think of future buyers before making major changes. Think twice before you pour time and money into upgrades that will hurt your ability to sell in the future. If you really want to do some of these things anyway, just remember that you are unlikely to recoup much of what you spent and that your house may spend more time on the market before it sells. Here are some “upgrades” to avoid.
Room conversions that take away a bedroom are a really bad idea. When it comes time to sell, one more bedroom is worth a lot more than a home office or gym. You don’t want to have to list your house with three bedrooms when it could have been listed with four.
If you must convert a bedroom for other purposes, just make sure that you can easily change the room back into a bedroom before listing. The worst room conversion is probably the professional-grade home office. It just won’t excite potential buyers when it’s time to sell.
Putting in a swimming pool rarely pays. Many potential home buyers will think of nothing but all of the maintenance that a pool requires. Additionally, families with kids will probably view it as a safety hazard that they don’t want to deal with. In short, a pool is more likely to be viewed as an inconvenience than anything else. If you live in a neighborhood where many homes have pools, however, you may be the exception to this rule.
It’s also best to avoid specialty features like tennis courts. You may think that a tennis court would make your home sound luxurious, but future buyers may see it as a colossal waste of valuable yard space.
A nice-looking yard is important, but upscale landscaping can be a big downside for buyers. They likely don’t want to have worry about high-maintenance landscaping. They may not want to spend all weekend in the yard or have to pay somebody to do the work for them.
Instead, you should install low-maintenance, native plants for a yard that looks nice but also requires minimal effort. In particular, avoid water features that use copious amounts of water—you don’t want to alienate a potential buyer than feels strongly about not wasting water.
Clean, new wall-to-wall carpeting used to be a big selling point. That’s not true anymore. Most people are far more interested in hardwood floors. If you have hardwood floors, consider refinishing to make them look new again rather than putting in carpet.
Personal, trendy touches are not appealing to buyers. This is especially true of very bold colors and patterns. No matter how much you love those bright red countertops, they are unlikely to appeal to the average buyer. And most likely, they will just be ripped out in the future. Consider more classic, traditional features that appeal to a wide range of people.
Pricey, high-end kitchen appliances may not add any more value to your home than less expensive ones would. Depending on your neighborhood, potential buyers may be unwilling to pay what those appliances are worth if they believe such items are unnecessary. The value of your home will be determined by the homes surrounding it, no matter how nice your appliances are.
What to Do?
Even things that seem sure, like kitchen and bathroom remodels, may not pay for themselves. A $25,000 kitchen remodel is likely to net about 68% of what you spent, so unless you’re going to be around for a while to enjoy the benefits of the remodel, it’s probably not worth doing.
For a list of renovations and their average payoff in different markets, click here. The simpler and lower in cost the project is, the more likely it is to have some pay off. And remember, even if you don’t get back 100% of what you spent, wise improvements can reduce the amount of time your home spends on the market.
Nice newsletter. Good article. Good information. Thank you. Carol
For conventional financing, borrowers with scores at 740 or anywhere above generally receive the same loan pricing (rate and cost). That being said, the better your credit the higher your chances of receiving loan approval with high debt to income (up to 50%) or high loan to value (up to 95%) which can be a major benefit when applying for a new loan. For Jumbo financing, borrowers with credit scores above 800 are generally rewarded with both better pricing and easier guidelines. There are no situations where better credit is a negative when obtaining new financing so we should all continue to strive to reach and then stay in the 800’s.
What are the advantages of a score over 800
Thank you Mike for this information. As a residential realtor the information that you provide is crucial to a successful transaction for my clients. You are indeed a pleasure to recommend to all of my clients. You are so professional, thorough, conscientious and pleasant to work with. !!
Hi Dane! Wanted to make sure I'm clear on this. Am I right in saying that on whichever remodel is done you still take a loss rather than an increase in value - the ROI will never exceed 100% of cost?