Just because you upgrade doesn’t mean you’ll profit when it comes time to sell.
If you’re hoping to increase your home’s value (above and beyond the cost of an upgrade itself), you should know that the upgrades you value might not be valuable to potential buyers. In fact, you may never recoup the full cost of some home improvements, and the primary offenders might surprise you!
Five common upgrades with the worst return on investment
1. Adding a pool
Pools can be hit-or-miss when it comes to added value. If you’re selling Orlando, FL, real estate, or you live in a warm climate where people are inclined to use a pool year-round, you’re more likely to get a favorable response from buyers. Often, however, the return is not enough to pay for the pool itself. Don’t forget to budget a large chunk of change to operate and maintain the pool. Ultimately, your likelihood of recouping the money you spent on maintenance, in addition to the installation costs, is fairly low.
Adding a pool to your home could be a major turnoff to some buyers. Buyers with small children may be concerned about safety risks, those 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 may not have the extra cash to deal with the added expense.
2. Highly custom designs
Unless you plan to stay in your house for many years to come, think twice about renovations that are too personalized. Installing a kitchen backsplash? The specific type of tile might not matter to buyers — they could be just as happy with a simple ceramic tile as they would with an expensive Calacatta marble tile. Similarly, choosing a beveled countertop edge that’s complex and ornate, rather than a basic beveled edge, could off buyers whose tastes don’t align with yours.
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 tastes. If you’re going to upgrade your kitchen just for the sake of selling, stick with neutral, builder-grade design decisions.
3. Room conversions
Buyers look to check certain boxes when they tour your home: For example, three bedrooms, two bathrooms, and a garage. Getting rid of these expected spaces (or altering them into something unusual) may harm your resale value. Bedrooms are coveted spaces that can bump your listing up into the next bracket. Buyers are looking for a specific number of bedrooms, and may not appreciate the work it took to take a wall down for a secondary master suite, or the soundproof foam to convert into a recording studio.
4. Incremental square footage gains
Sizable square footage gains — like finishing your dingy basement so it becomes an additional livable floor — can be a boon in buyers’ minds. But tiny, insignificant changes may not give you much of a return on your investment. You may love your new sunroom, but it’s not likely to drastically increase your home’s overall value. 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.
When your upgrades feel overboard for your neighborhood, you 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 your neighbors’ kitchens look before you invest a small 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.
Pursue these home upgrades for your own enjoyment — but don’t trick yourself into believing you’ll more than recoup the cost of the improvement in the form of a much larger listing price when it comes time to sell. You can always opt for the projects that have the best potential to draw in a buyer instead!
What home upgrades have you taken on? Share your tips in the comments below!
About the author
Paula Pant is an award-winning journalist specializing in personal finance, investing, real estate, and entrepreneurship. She’s a former deputy news editor of the Colorado Daily.