Homeowners often assume that upgrades and renovations always increase their place's value and make it more sellable. But while many home improvements can add to a house's appeal, they might not add value. In some cases, they could even act as a detriment when the property goes on the market.
Here are seven of the most common home improvements that could turn out to be mistakes.
- A beautiful yard is an attractive and time-consuming hobby that increases appeal, but it doesn't increase the value of your home.
- Utilities are necessary for a house to function, but new or state-of-the-art utility features don't add to your home's value.
- External waterworks, such as pools, don't add value; to many buyers, they add unwanted maintenance costs.
Extensive Professional Landscaping
You can build an entire amusement park in your backyard, and it won't bring you big bucks upon resale. If you want to put in a waterfall that cascades down into a koi pond, do it because you enjoy the water feature, not because you're hoping to recoup the investment.
Landscaping choices are a personal preference, and all the hand-crafted bridges and unique pergolas in the world won't dramatically boost your bottom line. And some buyers will inevitably see only the money required to keep that beautiful backyard well maintained.
Upgrading the Utilities
Although you may have paid thousands to install new copper or PEX plumbing, replace your sewer lines or septic system, or upgrade the electrical wiring to Romex or conduit, it's unlikely to bring you more dollars. These types of utility improvements are considered home maintenance, and your neighbors probably made them years before you.
Making everything state-of-the-art isn't a bad idea: In certain areas, top-of-the-line is considered the standard; without it, you could take a hit when selling time comes. But don't convince yourself that those upgrades will let you mark up the price tag.
Many buyers in the marketplace appreciate a home that features a brand-new furnace or HVAC system, but they won't pay you much extra for having replaced it. However, if the HVAC system is particularly energy-efficient, you should use that as a selling point; it may make a potential buyer more excited about purchasing your home.
While not a value increase, new appliances and central air systems can add to appeal as they mean fewer expenses for buyers after they have bought the home.
The same holds regarding a new roof: Replacing a roof past its average life expectancy of 30 years is considered a maintenance issue and won't necessarily enable you to up your asking price. But giving buyers who are on the fence the peace of mind that they won't have to make that costly repair anytime soon could spur them to make an offer.
Swimming Pool or Hot Tub
The TV commercials for pools and hot tubs depict children having a blast splashing around, and adults sipping cocktails in the bubbling water. Sadly, though, the cost and expense of aquatic amenities rarely find their way back into your pocket.
Pools raise the cost of homeowner's insurance in most areas, so they are not worth the cost to many buyers.
Many people won't buy a home with a swimming pool. They don't want the upkeep or safety issues. In fact, as part of negotiations, a buyer might insist that you tear out the pool or whirlpool. If you want to install a pool or hot tub, do it because you will enjoy it, not because it will pay off when it's time to sell.
Making Quickly Dated Decor Changes
You might like white appliances and white ceramic counters, for example, but young home buyers do not. They are no longer "in." And don't go down the road of rose gold bathroom fixtures and door hardware. Even 12-inch-by-12-inch ceramic flooring has lost its appeal to some. The point is, don't deliberately decorate in the latest style for resale reasons. Fashion changes too quickly.
The salespeople at the solar panel company might tell you that installing solar panels will enhance your home's value, but that's often not true. Going solar may be an admirable thing for the environment, but it usually does nothing for your residence's selling price.
Energy-saving features appeal to buyers, so don't completely write off solar energy upgrades; some states and counties have decreased property taxes on homes with solar panels.
Moreover, if you have financed the solar panels, you probably can't sell the home without paying off the balance at closing, which is often not disclosed.
The Bottom Line
Some homeowners are devastated to find out that the improvements they invested in—and perhaps have borrowed money for—not only do not improve the value of their property but might even detract from it.
Fortunately, while most of these enhancements won't help you turn a bigger profit, they probably won't hurt either—and they might make it easier to sell your home by giving the buyer some peace of mind or an amenity they always wanted. Just don't confuse buyer peace of mind with an elevated price tag.
Frequently Asked Questions (FAQs)
Which home improvements add the most value?
Some home-improvement projects return a significant amount of the expense to you in the form of increased home equity. Some of the biggest-ROI projects include a new garage door, stone veneer siding, a kitchen remodel, and upgraded windows.
What kind of home improvements are tax-deductible?
Certain capital improvements and energy-efficient upgrades may be tax-deductible, though the specifics of what qualifies can change over time. If the improvement adds substantial value to a home and extends its useful life, it's generally considered a capital improvement and can reduce or eliminate your tax obligation when you sell the home. Other upgrades, like energy-efficient improvements or enhancements for medical reasons, may be deductible from your taxes at the end of the year.