Sometimes, home improvements have to take place thanks to a structural flaw, aging plumbing or another major issue that needs fixing. It’s when a homeowner decides to renovate to align their home with their personal taste or with the intent to sell that they can get themselves in trouble, said Jeremy Sopko, CEO of privately owned mortgage lender Nations Lending.
Sopko said there are certain renovations that, if done correctly, will have a strong return on investment, such as updating bathrooms and kitchens. However, one of the worst things you can do is make renovations that aren’t supported by the local market (i.e. potential buyers).
“Fabricating and customizing to your very specific tastes doesn’t necessarily mean those are the tastes of the market,” he explained. That’s especially true of lavish upgrades that don’t fit in with the surrounding environment. “The classic real estate advice is that it’s never good to have the most expensive house in the neighborhood. If, after your upgrades, you’ve got a $600,000 home in a neighborhood surrounded by similarly sized homes selling at $400,000, it’s a risk,” Sopko said.
So before you pick up your sledgehammer, find out what specific types of home renovations can bring down the resale value of your home or make it tougher to eventually sell.
1. Over-The-Top Kitchen Upgrades
The kitchen is often viewed as the most desirable portion of a home and an area of the house that potential home buyers are likely to base their decision on, according to Susan Bozinovic, a realtor with Century 21.
However, spending too much for a kitchen renovation can hurt a home seller in two ways. For one, “A high-end kitchen in a home that isn’t itself high-end creates expectational disproportion among buyers,” Bozinovic said. In other words, homebuyers may dislike the quality mismatch between the kitchen and the rest of the house.
Bozinovic added: “The second problem is that such expensive kitchen remodels do not generate much of a return. You don’t want to put a $100,000 kitchen in a $200,000 home because not much of the renovation investment can be recouped.”
Typically, kitchen renovations shouldn’t exceed 25% of the home’s value. Given that the median home value in the U.S. is $227,700, the cost of the average remodel shouldn’t be more than about $56,925.
2. Poorly Conceived Room Additions
One of the most common types of renovations that destroy a home’s value is a poorly conceived room addition, according to Robert Taylor, a real estate investor and rehabber based in Sacramento. For instance, no one wants to sleep in the bedroom that someone has to walk through to get to the bathroom. You should also avoid additions that seem to be globbed onto the side of an existing home without much thought.
“It’s way too easy for a room addition to make your home look like the Winchester House instead of the Taj Mahal.”
– Robert Taylor, a real estate investor and rehabber
“If you’re going to add an addition to your home, it’s wise to get professional help with the layout. Getting multiple people’s input may help you find a way to add a hallway that will connect the addition without destroying the floorplan,” he said.
Taylor also noted you should be careful about overbuilding for the neighborhood where your house is located. For example, if you add a second story to your existing 1,500-square-foot home, you might think you’re adding another 1,000 square feet. “But if all of the other homes in the neighborhood are single-story ranch homes, your home becomes the elephant in the neighborhood,” he said. In this case, it’s unlikely you’ll be able to fully recoup the costs of the new addition when you resell your home.
“It’s way too easy for a room addition to make your home look like the Winchester House instead of the Taj Mahal,” he said.
When it comes to homes with pools, the saying is, “Everyone loves a pool, but not the maintenance.” Pools are not only expensive to install (costing around $25,000 to $30,000), but costly to maintain. Plus, they present a safety hazard to some families. So if you invest in a pool, know that you’re unlikely to recoup the cost.
“If you make the decision to add one to your property, it should be done with the expectation that you and your family plan to use it for years to come,” said Paul Andrés Trudel-Payne, owner of Casa Consult+Design and Sandstone West Real Estate.
4. Room Conversions
As much as you might want a home office or gym, it’s usually not a great idea to fully convert a bedroom or garage into a room for another use, especially if it involves removing closets and other storage space.
Bozinovic explained that the number of bedrooms a home has is a feature that virtually all home buyers consider when deciding whether to even look at a property. “So if your home has one less bedroom, [some] buyers will immediately set the home aside,” she said. And like bedrooms, a garage is a feature that also determines initial buyer interest. Most buyers would prefer a garage they can use with its original intended purpose, especially in areas where the weather can get bad or there’s limited street parking.
5. Quirky Customizations
Unique designs, such as funky wallpaper, textured walls and quirky tiling, as well as built-in features, such as walled aquariums or expensive electronics, might be exactly what you want, but are often off-putting to buyers. “Much of this is seen as a bother to buyers, either for the maintenance or the cost of replacing it,” Bozinovic said.
If your home features a lot of customization that might not appeal to a wide audience, buyers will likely subtract the cost of replacing these features from their offers.
6. Wall-To-Wall Carpeting
If you’re going to go through the trouble of replacing the flooring in your home, you might as well spring for a hard surface such as wood or tile rather than carpeting. “Most buyers hate carpets, so when they see them, they get turned off,” said Pavel, a realtor and founder of Pavel Buys Houses.
Khaykin advised that prior to renovating your home and putting it on the market, you should ask your realtor to provide you with a list of homes in your neighborhood that have recently sold and take a look at what type of amenities and upgrades those homes had.
As a homeowner, you’re free to make any changes you want. You’re the one who has to live there, after all. So if you plan to stay awhile, don’t shy away from upgrades that make it more comfortable and enjoyable.
However, understand that when it does come time to sell, you might need to invest in additional renovations or upgrades that make your home more attractive to potential buyers.