Real estate markets are truly different everywhere you go, so what stands true for one area might not be the same for another. And when you add in timing – whether it’s a “buyer’s market” or a “seller’s market” – it gets that much more difficult to really know what will impact a home’s value.
There are, however, some types of home improvements that most homeowners assume will automatically drive up their home’s value, but in fact these improvements will likely cost more than what a prospective buyer would be willing to pay.
In other words, you would be hard pressed to get back what you put into it.
1. Kitchen overhaul
You’ve been drooling over Home and Garden and House Beautiful Magazine, trying to come up with the perfect kitchen renovation for your outdated kitchen in hopes that your European styled kitchen will drive up your home’s value.
While beautiful kitchens are an appealing feature of a home, will it increase your home’s value?
According to Zillow Talk, the ROI (return on investment) of a kitchen remodel is only 50 cents out of every dollar spent! Since the national average of a home remodel is nearly $60,000 dollars, perhaps you should take a closer look at your dream project and see if you can’t scale it down to only those areas you use the most.
2. Swimming pool
Swimming pools are a great feature for a home, but are they worth the initial and ongoing expense?
Consider the following factors before dropping anywhere from $30,000 to more than $100,000 for an in-ground pool:
Your neighborhood – are they a common feature of the homes in the area?
Your climate – warmer climates will see much more use of the pool than colder ones
Other factors that might impact your ability to recoup the cost if you sell include:
Potential buyers with young children might be hesitant to make an offer (reducing your prospects)
Some buyers view swimming pools as dangerous or expensive and may make their offer contingent on the pool being filled in
Swimming pools will typically only recoup about $10,000 to $20,000 in home value (depending on location)
3. Invisible Improvements
Improvements such as a new plumbing system or HVAC unit may increase a buyer’s interest in your home, but that doesn’t mean their offer will help you recover the cost of these improvements.
Buyers assume that these systems will be in good repair, but they won’t be coughing up extra money to pay for the new furnace you had installed; it was simply every homeowner’s responsibility – a/k/a maintenance!
How to calculate the value of an improvement
There are a couple of ways you can determine if an improvement to your home might increase its value:
- Speak with one or more area realtors; get their opinions on what buyers are willing to pay a premium for
- Use a cost versus value calculator for an idea of how much return a particular improvement might offer
Finally, don’t base an improvement to your home solely on what kind of return you can get should you sell. Any improvements you undertake should be ones that you and your family need and want…it is, after all, your home!