Things You Think Add Value to Your Home -- But Really Don't
by Jean Folger
Sunday, October 3, 2010
provided by Investopedia
Every homeowner must pay for routine home maintenance, such as replacing worn-out plumbing components or staining the
deck, but some choose to make improvements with the intention of increasing the home's value. Certain projects, such as
adding a well thought-out family room -- or other functional space -- can be a wise investment, as they do add to the value of
the home. Other projects, however, allow little opportunity to recover the costs when it's time to sell.
Even though the current homeowner may greatly appreciate the improvement, a buyer could be unimpressed and unwilling to
factor the upgrade into the purchase price. Homeowners, therefore, need to be careful with how they choose to spend their
money if they are expecting the investment to pay off. Here are six things you think add value to your home, but really don't:
1. Swimming Pools
Swimming pools are one of those things that may be nice to enjoy at your friend's or neighbor's house, but that can be a hassle
to have at your own home. Many potential homebuyers view swimming pools as dangerous, expensive to maintain and a
lawsuit waiting to happen. Families with young children in particular may turn down an otherwise perfect house because of the
pool (and the fear of a child going in the pool unsupervised). In fact, a would-be buyer's offer may be contingent on the home
seller dismantling an above-ground pool or filling in an in-ground pool.
An in-ground pool costs anywhere from $10,000 to more than $100,000, and additional yearly maintenance expenses need to be
considered. That's a significant amount of money that might never be recouped if and when the house is sold.
2. Overbuilding for the Neighborhood
Homeowners may, in an attempt to increase the value of a home, make improvements to the property that unintentionally make
the home fall outside of the norm for the neighborhood. While a large, expensive remodel, such as adding a second story with
two bedrooms and a full bath, might make the home more appealing, it will not add significantly to the resale value if the house
is in the midst of a neighborhood of small, one-story homes. (Overbuilding might be anticipating your neighborhood's next
move.)
In general, home buyers do not want to pay $250,000 for a house that sits in a neighborhood with an average sales price of
$150,000; the house will seem overpriced even if it is more desirable than the surrounding properties. The buyer will instead
look to spend the $250,000 in a $250,000 neighborhood. The house might be beautiful, but any money spent on overbuilding
might be difficult to recover unless the other homes in the neighborhood follow suit.
3. Extensive Landscaping
Homebuyers may appreciate well-maintained or mature landscaping, but don't expect the home's value to increase because of it.
A beautiful yard may encourage potential buyers to take a closer look at the property, but will probably not add to the selling
price. If a buyer is unable or unwilling to put in the effort to maintain a garden, it will quickly become an eyesore, or the new
homeowner might need to pay a qualified gardener to take charge. Either way, many buyers view elaborate landscaping as a
burden (even though it might be attractive) and, as a result, are not likely to consider it when placing value on the home.
4. High-End Upgrades
Putting stainless steel appliances in your kitchen or imported tiles in your entryway may do little to increase the value of your
home if the bathrooms are still vinyl-floored and the shag carpeting in the bedrooms is leftover from the '60s. Upgrades should
be consistent to maintain a similar style and quality throughout the home. A home that has a beautifully remodeled and modern
kitchen can be viewed as a work in project if the bathrooms remain functionally obsolete. The remodel, therefore, might not
fetch as high a return as if the rest of the home were brought up to the same level. High-quality upgrades generally increase the
value of high-end homes, but not necessarily mid-range houses where the upgrade may be inconsistent with the rest of the
home.
In addition, specific high-end features such as media rooms with specialized audio, visual or gaming equipment may be
appealing to a few prospective buyers, but many potential homebuyers would not consider paying more for the home simply
because of this additional feature. Chances are that the room would be re-tasked to a more generic living space.
5. Wall-to-Wall Carpeting
While real estate listings may still boast "new carpeting throughout" as a selling point, potential homebuyers today may cringe at
the idea of having wall-to-wall carpeting. Carpeting is expensive to purchase and install. In addition, there is growing concern
over the healthfulness of carpeting due to the amount of chemicals used in its processing and the potential for allergens (a
serious concern for families with children). Add to that the probability that the carpet style and color that you thought was
absolutely perfect might not be what someone else had in mind.
Because of these hurdles, wall-to-wall carpet is something on which it's difficult to recoup the costs. Removing carpeting and
restoring wood floors is usually a more profitable investment.
6. Invisible Improvements
Invisible improvements are those costly projects that you know make your house a better place to live in, but that nobody else
would notice -- or likely care about. A new plumbing system or HVAC unit (heating, venting and air conditioning) might be
necessary, but don't expect it to recover these costs when it comes time to sell. Many homebuyers simply expect these systems
to be in good working order and will not pay extra just because you recently installed a new heater. It may be better to think of
these improvements in terms of regular maintenance, and not an investment in your home's value.
The Bottom Line
It is difficult to imagine spending thousands of dollars on a home-improvement project that will not be reflected in the home's
value when it comes time to sell. There is no simple equation for determining which projects will garner the highest return, or
the most bang for your buck. Some of this depends on the local market and even the age and style of the house. Homeowners
frequently must choose between an improvement that they would really love to have (the in-ground swimming pool) and one
that would prove to be a better investment. A bit of research, or the advice of a qualified real estate professional, can help
homeowners avoid costly projects that don't really add value to a home.