You dream about a marble bathroom, and maybe an in-ground swimming pool, but will you ever see a profit? An outdoor kitchen would be nice, and what about slate roofing shingles? Those are bound to improve the value of your home. Then again, maybe they won't.
All of the luxuries that you want are worth having if they make your life better. But if you're improving your home in an effort to bring a better price, tread lightly on upscale upgrades. More often than not, they just don't pay off.
Why Custom Upgrades Might Not Pay Off
Luxury details such as crystal chandeliers and fully-custom kitchen cabinetry don't return the same value that they cost. That's where some owners go astray. If you spend a certain amount on an improvement, shouldn't that boost the value by at least a similar amount? Not really, not if the neighborhood can't support it.
If all of your neighbors have similar custom details and yours is the only one that doesn't, then your value might be negatively affected without them. But if yours is the nicest home around and you layer on more, the most likely outcome is a home that just won't sell, at least not for what you've put into it.
That doesn't just happen in average neighborhoods, either. Some of the most upscale properties owned by America's richest people haven't had even a nibble's worth of interest in years or decades. The New York Post says that advertising executive, Ilon Specht, listed his palatial apartment at the famed Dakota in Manhattan for just under $20m. After 10 years, the property still hasn't sold.
Designer Tommy Hilfiger's ultra-personalized home has dropped from $80m to just under $70m, and still it languishes on the market. Sometimes glitz isn't as important as it looks, and it can push an otherwise lovely home out of reach for buyers who might want it, even in an already upscale market.
Sometimes the least expensive improvements bring the highest return on investment.
What Really Affects Home Values
Location, comparables, the condition of the home, and its suitability for people who typically want to live in the area - those are important factors in a home's value. Buyers don't often care whether cabinets are custom or semi-custom. And if there's a wood floor, oak is just as lovely and serviceable as tigerwood, at a fraction of the cost.
Space is important. If you want to improve the value and only have two bedrooms, an addition for a third is a better choice than a master bath dripping in marble. Home offices are great. But not instead of a cozy family room, extra bathroom or a larger kitchen.
But before you plunk down any investment at all, be sure that the house is in tip-top condition. That matters most. Replace an old HVAC unit that's on its last legs instead of building a new outdoor kitchen. Address electrical or plumbing issues, don't add a home theater instead.
What's important is that the house is suitable for the area, and that the new owners have to spend as little as possible after moving in. That's what makes a home attractive. Anything else is just window dressing.
Which Improvements Make the Most ROI Sense
Before you give up on your dreams of making a considerable boost in the value of your home, there are some improvements that make a difference. Here are a few of them, and you probably have others depending on the norm where you live.
- Energy efficient upgrades
- New or remodeled kitchen
- New or remodeled bathrooms
- Useful additions (not additions for superfluous rooms such as a gym or home spa)
Paint, kitchen cabinet refacing, refinished wood (including floors) and new appliances all make great strides toward improving a home's value, according to This Old House.
Everyone wants top dollar when selling a home, but not everyone goes about it the most effective way. Just because an improvement costs a fortune doesn't mean you'll ever get that back.
A viking range in the kitchen might look fantastic. But unless everyone in your neighborhood has one, you're probably better off with a nice, reasonably priced stainless range from a manufacturer that's not quite so upscale. Think useful, not glamorous, and you'll fetch a better profit when you're ready to sell your home.
Wondering how your house measures up against others in the area? At eppraisal, that's one of the things we do best. Get your free property valuation today.