Beware of those home renovations that could hurt your value
When you’ve owned a home for a while, it stands to reason that you might want to do some updates. And while your renovations naturally reflect your lifestyle and personal choices, remember that your home is also an investment in your financial future. Many home improvements add value, but others can work against you.
Before planning a demo day, pay attention to those projects that could negatively impact your value.
Kitchen renovations to match
If you love to cook, then chef-quality cuisine is probably important to you. But if you think that a high-end kitchen will result in a big return when you sign up, you might be surprised. According to the Cost vs. Value from Remodeling Magazine for 2020, a major high-end kitchen remodel cost around $ 135,500, delivering a return on investment of just 53.9%. A major midrange remodel cost around $ 68,500 and only yielded a slightly over 58.6% return.
“The biggest problem with any renovation, but especially with kitchens and bathrooms, is getting better for your specific market,” said Doug Petroff of Petroff Appraisals. “Anything outside of what is typical and expected for your neighborhood may not provide the returns you expect. If your home is worth $ 160,000, a $ 50,000 kitchen overhaul might impress a few buyers, but it probably won’t add much, if anything, to your overall value.
An inground pool
Lounging on a pool float with a cold drink in hand seems like a great way to spend the summer. But installing and maintaining a swimming pool is expensive. Plus, when it’s time to sell, potential buyers may actually see this feature as a downside as they don’t want to deal with maintenance and insurance.
If you use the pool regularly and plan to stay in your home for several years, then go for it! But before you start, think about how this will impact your home insurance premiums, your energy bills, and whether you really have the time to maintain and enjoy it.
Wall for wall mat
If it’s time for a flooring update, you might as well go for hard surface options. Carpeting throughout the home is a big drag on buyers and it could ultimately hurt the value of your home. According to the National Wood Flooring Association, 90% of realtors say hardwood homes tend to sell for more, while a study by the National Association of REALTORS® (NAR) found that 54% of buyers were willing to pay more for homes with hardwood.
And when it comes to ROI, there are few projects more beneficial than installing hard surface flooring. In its 2019 Remodeling Impact Report, NAR cited the average cost of a hardwood flooring project at $ 4,600, with homeowners getting back $ 5,000 – or 106% – of their investment.
Too much of a good thing
Trendy wallpaper in a powder room or on an accent wall is a nice touch that enhances your design game and personalizes your home. However, wallpaper in multiple rooms can be overwhelming and potential buyers will likely see it as another project they will need to tackle if they buy your home.
“It’s the same with any trendy design choice like colorful tile, textured walls, or bold paint,” said Petroff. “I rated a house that had clapboard in almost every room, and while that didn’t necessarily hurt the value, it didn’t add anything. The problem is, these projects are expensive and time consuming, and when it comes to reselling, you might put off a lot of buyers who will only see the extra work.
Converting a garage into a living space or combining two bedrooms into one may suit your lifestyle and current needs. But if you don’t plan to stay put forever, it could come back and bite you.
The number of bedrooms in a house is important to virtually all buyers, so when you turn a three-bedroom house into a two-bedroom house, you are significantly reducing your future purchasing pool. And like bedrooms, most buyers prefer a garage that they can use with its original purpose, especially in Michigan where we like to protect our vehicles from winter weather conditions.
However, it may be beneficial to convert unfinished areas to usable square footage. But like any renovation, you probably won’t get a dollar-for-dollar return on your investment. According to NAR’s 2019 report, converting an attic to living space yielded a 56% yield, while finishing a basement to living space yielded a 64% yield.
In addition to these projects, things like high maintenance landscaping, removing closets, adding a built-in aquarium or hot tub, and shoddy DIY repairs all made lists. online renovations that could negatively impact your value.
And while we discuss renovations that could potentially hurt value, Petroff says it’s important to know that a lack of renovations could work against you as well.
“If you’re in an upscale neighborhood where the majority of homes have finished basements and remodeled kitchens, your value probably won’t be as high as your neighbors if you don’t have these features,” he said. he declared. “While you don’t want to improve too much in your field, you don’t want to be ‘under-improved’ either. Again, the best way to protect your value is to always consider your market when undertaking a renovation.
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