Home renovations can be an exciting way to freshen up an existing home. In many cases, certain renovations can make a considerable difference when going to market for sale, resulting in more interested buyers, less days on market, and sometimes thousands more in the seller’s pocket. If you are planning to do home renovations with the hope that the money invested in the project will be recouped once the home is sold, there is a chance you could end up disappointed. Therefore, it is important to do your homework before starting any projects, so that you know what renovations will and will not add value to your home.
The amount of return you can expect to get can vary based on many different factors. The home’s location, the current real estate market conditions, and the materials you use all play a role in how much value you can expect the project to add. While you weigh the pros and cons of tackling that home renovation project, we want to mention 3 renovations that are commonly misunderstood to be valuable upgrades, when in all reality, they rarely pay off.
#1. Pool
Swimming pools are a great addition to a backyard for entertainment or relaxation, but not so much for adding value to your home. The average inground pool installation costs around $40,000. The amount of value it will add to your home? Approximately 7%.
When it comes to pools, the amount of value you will see added to your home will depend on the neighborhood, the pool’s design, and how well it is maintained. If you want to build a pool for entertainment purposes, go for it! But if you are planning to add the pool to increase the value of your home, you will be disappointed.
#2. High-End Kitchen
Upgrading an out-of-date kitchen may boost your home’s appeal, but going overboard and installing a gourmet kitchen with high-end appliances, marble countertops, and custom cabinetry will not recoup its value. Studies show that a gourmet kitchen will typically recoup only 54% of its cost.
If you are planning to renovate the kitchen before listing your home for sale, you will want to be sure not to over upgrade for your area. Opting for a simple, basic kitchen remodel will do a little better, recouping about 64% of the cost. It is a good idea to take a look and see what is on-trend in your area, prior to making any improvements. But it is still likely that you will not make all your money back.
#3. Master Suite Addition
Adding on to your home rarely pays off. Increasing the size of your master bedroom to make it a luxurious suite sounds great, but due to the high cost of materials and permits, it will not pay off. Doing such an addition will recoup about 50% of its cost. For anyone planning to sell the home, this renovation would simply not make sense financially.
The Bottom Line
As a rule, if you plan to remodel part of your house before listing it for sale, do not do anything over the top. High-end appliances and materials do not keep their value. Too much customization may also be a bad idea. What you like may differ from someone else’s taste, and you don’t want to turn off any potential buyers.
If you are planning to sell your home but worried about paying for any renovations, be sure to discuss these concerns with your agent. There are companies that will help you complete the upgrades on the home, and compensation is paid when the property closes escrow. With this option sellers can eliminate any up-front expenses, and many times it results in adding thousands more to their pocket that otherwise would have been left on the table.
So, whether you are already planning some home renovations or you are simply weighing your options, before you make any decisions you should speak with a real estate agent. They will be able to guide you on what does and does not add value, as well as provide you with options for getting the work done, which will help you save time and money.