You want to sell your home, and you want to get top dollar. You added thousands in renovations, but did those thousands you spent translate into added value? Many homeowners pour money into upgrades and additions only to find that the dollars were not wisely spent on things that would induce buyers to pay more for their home. So, how do you know if your upgrades added actual dollar value to your home versus simply making it more marketable?
Know Your Market
One of the biggest mistakes that homeowners make in renovating is upgrading beyond the market for their location. If the houses in your neighborhood are all roughly 2000 square feet and you add an additional 1000 square feet, you probably will not get your money out of it when you go to sell. Almost all home sales are subject to an appraisal. (Most lenders require an appraisal and even many cash buyers will require an one.) An appraiser has to show comparable properties in the area to assure that the property is good collateral for the lender. If the appraiser can’t find comparable properties, your house will be appraised at a level where it will actually sell, which likely won’t be top dollar. So, if you’re going to add square footage, be aware of how you are positioning yourself relative to your location.
Kitchens and Bathrooms Sell Houses
There is an adage in real estate that says that kitchens and bathrooms are the most important rooms in your house for resale. There is some truth to that. While the saying oversimplifies reality, a nice kitchen still goes a long way in impressing potential buyers. Again, know your market, but even in smaller homes, buyers like to see high end finishes, especially in the kitchen. When everyone around you is sporting granite or marble countertops, or some other expensive finish, that old laminate counter will not impress anyone. Dingy, worn cabinets, old appliances, and yellowing vinyl floors will turn off buyers quickly. And while you’re at it, update faucets, fixtures, and hardware, too. Bathrooms are also important, especially in the master suite. If you’re going to sacrifice part of your master bath to expand your walk-in closet, make sure you renovate the bathroom with high end finishes at the same time. If your master bath is smaller, it needs to be impressive. It won’t matter that you spent $20,000 on that closet expansion if it makes the bathroom look cramped and shabby.
But I Spent $100 Grand On That Garage!
You needed additional space for your boat, your RV, your motorcycles and your ATV, so you spared no expense building a slammin’ garage that’s completely finished and even has a rec room over it. Unfortunately, when you go to sell, buyers don’t see $100,000 additional value in having that magnificent garage. The value of some additions and improvements is only obvious to the current homeowner. If you built it knowing that it’s for your own personal pleasure, terrific, but do it with the understanding that buyers may not think it’s worth what you did.
Regular Maintenance Items Do Just That, Maintain Your Home’s Value
Homes require regular maintenance, especially as they age and things wear out. A roof usually lasts anywhere from 20-30 years, but a worn out roof will eventually need to be replaced. Windows, too, only last for a certain period of time before they have to be repaired or replaced. Flooring endures a tremendous amount of wear and tear, and has to be replaced or refinished. Cabinetry also has a tendency to become marred and worn over time. Repairing or replacing these items probably will not add dollar value to your home, unless you upgrade significantly. Even then, know your market. A well maintained home is very attractive to buyers, but upgrading beyond the real market value of your home will not necessarily net you additional money. However, maintaining your home will make it more marketable.
Paint Long and Prosper
Painting walls, trim, and wooden exteriors is sort of boring and is something that most people don’t like to do. Whether you do it yourself or hire someone to do it, clean, fresh paint goes a long way towards pleasing buyers. That grapey purple bedroom that your teenager thought was cool or that fire engine red dining room that was so popular in the 1990s could be a show stopper for potential buyers. While it’s not necessary to paint rooms that are done in muted or neutral colors, wild colors or textures (hopefully, we’ve seen the last of sponge painting) can be a deterrent to buyers. Trendy decorating is just that, trendy. The same goes for personal preferences; they’re personal and may not be shared by buyers. Let’s face it, painting is one of those mundane chores that isn’t sexy or fun, but it’s an improvement that makes a big difference in how buyers view your house.
And The Walls Come Tumbling Down
Open floor plans have become popular in the last few years, and they can be very appealing to buyers. Sometimes, it’s easy to remove walls and open up closed in spaces, but it can also be expensive. If you decide to renovate to open up a space, know exactly what you’re getting into and how much it will cost. Also, make sure that removing walls actually makes sense for the space you are reinventing. Simply tearing down walls may not make it more useable or practical. If you’re unsure, it may pay to consult a designer who is skilled at creating beautiful, practical spaces. Many buyers will be attracted to an open living space, and it is something that can add value to your home, but once again, you don’t want the cost to outpace the marketplace.
The Great Outdoors
Another area where it’s easy to get carried away with renovations is outdoor spaces, such as decks, patios, and gardens. Make no mistake, beautiful spaces outside your home can make it more attractive to buyers, giving it curb appeal or creating the feeling of luxury. But just as with any other renovation, it’s easy to spend a lot of money for improvements that won’t translate into additional dollars at sale. A gorgeous $20,000 water feature is awesome, but buyers may not see the value. The same thing goes for swimming pools. They’re called “an attractive nuisance” for a reason. They are expensive to install, maintain, and insure, and many buyers actually are very specific about not wanting a house with a pool. No matter how much they might like the house, the pool may stop them from even scheduling a showing. Sprinkler systems and water treatment systems are another feature that may make a home more marketable, but won’t necessarily add value. It’s okay to love your outdoor spaces, and many buyers want beautiful outdoor surroundings, but if you spent a bundle creating your own personal park like setting, don’t expect to get the money back out of it when you sell.
An Ounce of Prevention
Many renovations require a building permit and inspections to complete, and if you don’t get the work permitted, it can create major headaches when you try to sell. That additional bedroom you and your brother-in-law built onto the back of your house on the weekends isn’t reflected in the tax database because you didn’t get it permitted, and the appraiser is having trouble valuing your property because of it. Now, the city or county is requiring you to get the permits and inspections, but you will have to do some additional work to bring it up to code. Oops! If you aren’t sure whether your project needs a permit, contact your local government office and they will be happy to advise you about whether you need one and the processes and costs involved. If you’re using a contractor, they should know how to acquire permits and schedule inspections during construction. It is not uncommon for homeowners to have to make additional renovations to an existing project because they didn’t get the proper permits and inspections at the time the projects were done.
As your Realtors, we will be happy to advise you about pricing your property and which improvements add value versus making it more marketable. Contact us for a complimentary Comparative Market Analysis that will help you determine whether you can recoup the money you’ve put into renovations and improvements. We are ready to be of service to you!
