Will this upgrade increase my home's resale value?

By
Real Estate Agent with RE/MAX Gold, Fair Oaks

Will this upgrade increase my home's resale value?


I have read in Remodeling Magazine and other publications that a properly maintained and clean home is preferred over one that is upgraded, based on surveys.

It seems easy to determine from anecdotal evidence that upkeep may be more important to buyers than upgrades.  This isn't necessarily true for all buyers, of course, and all buyers want to buy a clean house with few necessary repairs. But for most of them, the decision of which is more important Don't overdo your upgrades for the neighborhood!depends on what kinds of upgrades we're talking about and how far in disrepair the home may be.

If you are looking to remodel or upgrade your home and you plan on selling within about five years, you should take several factors under consideration before you start your project.

High dollar, high end, highly personalized additions or remodels bring the lowest resale return on investment, and in some instances the buyer might even look at them and calculate the cost of ripping them out and reduce the offer even further.

So spend your money on those special projects only if you will be staying in the home for a long enough time that you can feel you got your money's worth in enjoyment.

I take buyers out home-shopping all the time, and while some buyers ooh and ahh over Adding a bathroom may not always bring return on investment.  Check with a realtor before beginning this upgrade.fancy over-the-top master suites or cabanas or lush water features, they don't really want to pay for them - especially if the improvements are significantly above the standards of that neighborhood.  And since neighborhood comps rule when the house is appraised, the buyer most likely will not get a purchase loan sufficient to cover such luxuries when they are uncommon for
the area.

Buyer priorities change over time and from area to area, but here are a few projects you should probably consider ONLY for your own pleasure while you live in your home, and for which you should not expect to recover the cost.  My own experiences in the Sacramento area coincide pretty much with the results that Remodel Magazine reports.

Probably the worst return on investment will be gained from a high-tech office with lots of built-ins and special wiring.  It might look beautiful, but most people are operating with wireless devices and all of that expensive electronic wiring would be better ripped out.  Any upgrades to make your office should be made so that the room can be easily converted back to a bedroom, since bedrooms have more value to Room additions can be expensive and may or may not add to your home's value, depending on what you are adding and howmost buyers (and appraisers) than a one-purpose room that cannot be used as a bedroom without significant remodeling expense for a buyer.

When selling, if you do have an office, call it a den or study.  A multipurpose room is perceived as good, and something that reminds people of work can be bad.  Depending on how elaborate your office is, your return on investment will be no greater than 40-45% at the very most.  My experience, however, shows that most folks will want to rip it all out (no matter how pretty it is), and they factor in that added expense before determining the property's worth to them.

Another remodeling mistake when it comes to resale value is the super master suites we sometimes see that are made by combining two bedrooms in a neighborhood where such masters are uncommon or nonexistent.  By doing this you have lost a bedroom, and converted the valuable 4 bedroom home (for example) into a three bedroom.

Probably the most common size home in our area has three bedrooms, and if I am doing my search for a home for buyer clients, I will search for a home in their price range, in their preferred area, with the number of bedrooms they need.  If I'm looking at a list of 3 bedroom homes in a specific neighborhood and one is priced very differently from the others, it might not even fall into my search parameters. 

So your home will have to be priced not much differently from other homes with the same number of bedrooms, even though one of your bedrooms is super-sized.  I'm also told by appraisers that the number of bedrooms is often more valuable than the fanciness of the rooms.
Spend on upgrades you will enjoy while you live there or which will bring high return on investment.
Remember that adding a bathroom - even if it's not luxurious - will probably cost $20-40,000, and it may be a good idea to ask a realtor whether that would be a good investment on your home in your area.

A fancy tricked-out garage might bring out the little boy in many men, and everyone can appreciate how great it looks, but there is a very limited market for such a garage, and you are unlikely to recoup that expense.

It is common for sellers to be very proud of the work they have done on their homes, and they feel it has made the home much more valuable.  It can be a touchy subject for a realtor to explain to this proud seller that he had decreased, rather than increased, the market value of s home.  His only consolation is the happiness and enjoyment he has received while he has lived with it.

So please stop and think before making major improvements to your home: Will this upgrade increase my home's resale value?  When in doubt, consult a realtor who can give you some guidance.

And please don't misunderstand this advice.  Some upgrades are very helpful for resale.  Upgrading your kitchen with granite or other modern surfaces, replacing older appliances, and perhaps even replacing linoleum floors with tile or wood will often bring great returns, as will upgrades in existing bathrooms.  Just remember not to make your home the most expsensive one on the block - it will likely not appraise for what you have invested.

Of course if you plan to live in the home for 5-10 years and the upgrades will make you happy, go ahead and enjoy yourself. Just don't expect to recover your investment when you sell in the future.


***

Thinking of selling your home?  Remember it costs you nothing for me to come out and discuss your home, the market in your area, and give you a market analysis and presentation so that you will know what you can expect to get for your home.

Call for appointment:  (916) 705-8951


Also Remember,
I can help you to tour any home for sale in Sacramento County and the surrounding areas, no matter what firm has it listed, and I can help you with your purchase if you find the perfect home for you.


Just give me a call at (916) 705-8951

***********

Susan Neal
Broker / Realtor

Susan Neal Fine Properties
Century 21 Noel David Realty
Fair Oaks, California

Full time real estate services in Fair Oaks CA, with friendly professionalism, 30+ years experience. 
I work hard to give my buyer or seller a low-stress transaction.

"Happy clients make me happy."

For all your real estate needs or questions, call me at (916)705-8951 or visit my website at www.SusanNealFineProperties.com.    

HUD homes resource             Search HUD Homes

Check out my business page on facebook:  Susan Neal Fine Properties

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*******

Thinking of selling your home?  Remember, it costs you nothing for me to come out and discuss your home, the market in your area, and give you a market analysis and presentation so that you will know what you can expect to get for your home.

Call for appointment:  (916) 705-8951


Also Remember, if you are planning to buy a home, I can help you to tour any home for sale in Sacramento County and the surrounding areas, no matter what firm has it listed, and I can help you with your purchase if you find the perfect home for you.

Just give me a call at (916) 705-8951

***********
Susan Neal
Broker / Realtor

Susan Neal Fine Properties
RE/MAX Gold
Fair Oaks, California

Full time real estate services in Fair Oaks CA, with friendly professionalism, 30+ years experience. 
I work hard to give my buyer or seller a low-stress transaction.

"Happy clients make me happy."

For all your real estate needs or questions, call me at (916)705-8951 or visitmy website at www.SusanNealFineProperties.com.    

HUD homes resource            Search HUD Homes

Check out my business page on facebook:  Susan Neal Fine Properties

 

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Karen Crowson
Alain Pinel Realtors, Pleasanton, CA - Livermore, CA
Livermore Wine Country Homes

Susan, I'm often asked if someone will need to remodel to sell the house. It really depends upon the market. If there is an over-abundance of inventory, some updates to the kitchen and baths may help the home get sold. But for the most part, the pricing of the home will play the bigger part in getting a property sold.

Sep 15, 2012 08:56 PM #1
Ambassador
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Tammie White
Benchmark Realty, LLC (615) 495-0752 or www.TWRealtyGroup.net - Franklin, TN
Franklin TN, South of Nashville

Susan, I think the best thing a seller can do prior to remodeling is contact a REALTOR®. I have a listing right now that has a beautifully updated kitchen but the primary complaint is that it doesn't have an open floor plan. Had the seller contacted an agent prior to remodeling, I think this would have been covered and the home would have sold a long time ago.

Sep 15, 2012 09:01 PM #2
Rainmaker
583,442
Susan Neal
RE/MAX Gold, Fair Oaks - Fair Oaks, CA
Fair Oaks CA & Sacramento Area Real Estate Broker

Karen - you are exactly right, and that is why I suggest that a call to a realtor could help them decide what they should do.

Tammie - I couldn't agree more.  Not every upgrade wil bring the most bang for the buck, even though it may be beautiful.

Sep 15, 2012 09:20 PM #3
Ambassador
1,332,954
William Johnson
RE/MAX Associates - San Diego, CA
San Diego Real Estate Voice, GRI CRS e-Pro CDPE
Hi Susan, This is a great topic and I am suggesting this post. Some very good advise is contaiined and there is some I mayy not always agree with but overall this is excellent.
Sep 15, 2012 09:42 PM #4
Rainmaker
256,725
Frank Castaldini
Coldwell Banker - San Francisco, CA
Realtor - Homes for Sale in San Francisco

Some work done on a house can get a lot more than the dollar amount spent.  It all depends on the market and the type of house it is.  It is important, however, to know what will yield more and what will yield less.  As was mentioned a seasoned Realtor would a a good person to assist in outlay vs reward.

Sep 15, 2012 11:38 PM #5
Rainmaker
1,389,610
Tom Arstingstall, General Contractor, Dry Rot, Water Damage Sacramento, El Dorado County - (916) 765-5366
Dry Rot and Water Damage www.tromlerconstruction.com Mobile - 916-765-5366 - Placerville, CA
General Contractor, Dry Rot and Water Damage

I love this topic Susan. It is important that the pwner knows that the improvement may not be worth it.

Sep 16, 2012 03:58 AM #6
Rainmaker
583,442
Susan Neal
RE/MAX Gold, Fair Oaks - Fair Oaks, CA
Fair Oaks CA & Sacramento Area Real Estate Broker

Thanks for your comments.  My heart breaks when I meet with a listing prospect and he proudly shows me what he has done to his home to increase its value.  Sadly, I have to tell him that he may have done just the opposite. 

A couple of months ago I met with a very nice and enthusiastic couple who wanted to list their home for sale so they could move to an area closer to their famiies, because they were expecting their first child.  They thought their "custom paint" on the walls would make their home more valuable. 

Each room was a different bright crayon color - so bright it almost hurt the eyes, and some walls also had flowers painted over and around the doors and windows in colors that were just as bright.  I had to tell them they would have to either repaint the walls in more neutral colors or realize that it would take a long while to sell their home, and likely for a lower price than if the custom paint were not there.

They were very hurt and didn't hire me, but I see that the home is now listed with another broker, and the walls are all painted in tones of beige.  I can only assume that after being told the same thing by several agents, they finally followed that advice.

Sep 16, 2012 09:55 AM #7
Rainmaker
651,682
Adam Malachi
RLO Millennium Real Estate and Mortgage. - Castle Rock, CO
QSC,CDPE,CIPS,CNE,CRB,CRS,GRI,MRE,SFR

Great post! Excellent information's and advise! I think kitchen improvement does works to help sell the property faster!

Thanks for sharing.

 

 

Sep 16, 2012 03:07 PM #8
Rainmaker
583,442
Susan Neal
RE/MAX Gold, Fair Oaks - Fair Oaks, CA
Fair Oaks CA & Sacramento Area Real Estate Broker

Adam - I agree that kitchen upgades do more than most to help sell a property.

Sep 16, 2012 03:15 PM #17
Rainmaker
981,145
Sharon Alters
Coldwell Banker Vanguard Realty - Fleming Island, FL
Your Fleming Island Relocation Agents.

Susan, would that every homeowner would have a consultation prior to home renovations to check out the impact of value on their home. Great post.

Sharon

Sep 16, 2012 06:23 PM #18
Rainmaker
583,442
Susan Neal
RE/MAX Gold, Fair Oaks - Fair Oaks, CA
Fair Oaks CA & Sacramento Area Real Estate Broker

Sharon - I wish they would.  It's too bad that most folks believe that all we're good for is listing homes, or that they will have to pay us for a consultation.  Obviously, we want listings, but if we can help people to increase the value of their homes, we will all benefit when those homes eventually go on the market.  We're an underused resource.

Sep 17, 2012 08:52 AM #19
Rainmaker
919,513
Jane Peters
Power Brokers Int'l - Los Angeles, CA
Connecting you to the L.A. real estate scene

This is some great advice, Susan.  I love the comment that buyers make like an expensive upgrade but don't want to pay for it.  Homeowners often don't realize that some of the "improvements" they make are not going to get them their money back.

Sep 17, 2012 01:27 PM #20
Rainmaker
734,982
Kwee Huset
Kwee Huset Realty - Venice, FL
Venice Florida Homes For Sale

Hi Susan, great information. One size don't fit all, some prefer the house is upgraded for move in condition and some like  handyman special. However the improvement only help to sell the house and the return is not guaranteed.

Sep 22, 2012 05:57 PM #21
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Rainmaker
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Susan Neal

Fair Oaks CA & Sacramento Area Real Estate Broker
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