5 Home Improvement Projects That May Bring Less Value Than You Expect
Home improvement television can make almost any renovation look like a great investment. Spend money, transform the space and watch the home’s value climb—right?
Real life is a little more complicated.
Some projects add value but do not add enough value to cover their cost. Others make a home more enjoyable for the current owner while appealing to a smaller group of future buyers. A few can even create additional paperwork, maintenance concerns or financing complications when it is time to sell.
That doesn’t mean you shouldn’t make your home your own. It simply means homeowners should understand the difference between renovating for personal enjoyment and renovating for resale.
Here are five projects that may bring less value than homeowners expect.
1. Leased Solar Panels
Solar panels can reduce monthly energy costs, but how they are financed matters.
Panels that are owned outright may be viewed differently from panels attached to a lease or power-purchase agreement. With leased solar, a future buyer may be required to assume the existing agreement and qualify with the solar company. If the buyer doesn’t want the lease—or cannot qualify—the seller may need to explore paying it off or negotiating another solution.
Solar can still be beneficial, especially for someone planning to remain in the home long enough to enjoy the energy savings. Before signing an agreement, however, homeowners should understand:
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Who owns the panels
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How long the agreement lasts
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Whether the contract can be transferred
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What happens when the home is sold
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Whether the payment increases over time
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What it would cost to purchase or remove the system
The equipment may be attached to the house, but the contract is what can create difficulty during a sale.
2. Over-the-Top Landscaping or a Luxury Pool
Outdoor living is a major part of life in the Charleston area, and an attractive yard can certainly help a home make a strong first impression.
However, there is a difference between creating inviting outdoor space and installing an elaborate outdoor environment that requires significant maintenance. Extensive gardens, water features, specialty lighting and complicated irrigation systems may look beautiful, but some buyers will see the time and expense required to maintain them.
Pools are similarly dependent on the buyer. One family may consider a pool the home’s best feature, while another may worry about upkeep, insurance, safety or the loss of usable yard space.
A pool or elaborate landscape may add value, but it will not necessarily add value equal to its installation cost. Homeowners should undertake these projects primarily because they expect to enjoy them—not because they assume every dollar spent will return at resale.
3. A $100,000 Kitchen in a $350,000 Neighborhood
Updated kitchens tend to appeal to buyers, but renovations still need to make sense for the home and neighborhood.
A clean, functional and thoughtfully updated kitchen can make a home easier to sell. Installing luxury appliances, custom cabinetry, imported stone and other premium finishes, however, does not automatically move a property into a dramatically higher price range.
Appraisers and buyers both look at comparable nearby sales. If similar homes in the neighborhood sell around $350,000, spending $100,000 on one kitchen may not produce a matching increase in market value.
The best renovation is usually one that fits the home. Improving worn cabinets, dated counters, poor lighting and inefficient storage may provide broader appeal than creating a luxury kitchen that is far beyond the surrounding market.
4. Converting a Garage or Bedroom
Homeowners naturally adapt their homes to fit their lives. A garage may become a family room, a bedroom may become an oversized closet, or two smaller rooms may be combined into one large space.
These changes may be perfect for the current owner, but they can reduce the home’s functionality for future buyers.
A buyer searching for a three-bedroom home may not view a beautifully converted two-bedroom home as an equal substitute. A buyer who needs storage or covered parking may prefer a functioning garage over additional interior space.
Conversions can also raise questions about permits, heating and cooling, ceiling height, electrical work and whether the finished area can legally be counted as living space. Before removing a bedroom or converting a garage, consider how the change will affect the home’s official description and its competition in the local market.
5. Highly Personalized Renovations
Your home should reflect your personality, but permanent and highly specific renovations may appeal to a limited number of buyers.
Examples can include:
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Elaborate themed rooms
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Unusual built-in furniture
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Extremely bold tile or countertops
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Specialty hobby rooms
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Converted wine rooms or cigar rooms
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Custom features that are expensive to remove
Paint is relatively easy to change. Built-in structures, unusual layouts and costly permanent finishes are different. Buyers may estimate the expense of reversing those changes and subtract it from what they are willing to offer.
If resale is on the horizon, consider expressing your personality through furniture, artwork and other items that can move with you while keeping the home’s permanent features broadly appealing.
Are You Renovating for Yourself or for Resale?
That is the most important question to answer before beginning any major project.
If you plan to live in the home for many years and a pool, specialty room or luxury kitchen will improve your quality of life, the project may be completely worthwhile—even if it never returns its full cost.
If you expect to sell relatively soon, focus more heavily on function, condition and improvements that appeal to a wide range of buyers. Repairing deferred maintenance, improving curb appeal, refreshing paint and updating worn surfaces may not be as exciting as a dramatic renovation, but they can often make a meaningful difference.
Before investing heavily in your home, talk with a local real estate professional who understands your neighborhood. A quick conversation about comparable sales and buyer expectations may help you spend your renovation budget where it will matter most.
Every house, neighborhood and homeowner is different. The goal isn’t to avoid improving your home. It’s to know what you want the project to accomplish before you begin.