Renovations must make dollars and sense.
Photo by Rustic Vegan on Unsplash
While your home is the place you live, it’s also the most expensive investment that most people will ever make. And when you’re trying to re-sell, the wrong renovation can have a long term cost you probably didn’t think about at the time.
The number one mistake sellers make when renovating, says Broker Alex Lavrenov of Warburg Realty, is only considering their own taste and needs within the home and choosing renovations that do not provide any value or benefit to the future homeowner.
Anything too personalized or stylized can really turn off future buyers, especially if they will need to do an additional renovation. “A buyer may not want such a traditional scheme or a super sleek modern kitchen. They often see what the seller sees as upgrades as something they need to fix or undo, therefore taking away the value,” explains agent Allison Chiaramonte of Warburg Realty.
Many homeowners have a tendency to go overboard when it comes to creating their dream space, especially if they are renovating a fixer-upper because they don’t believe they’ll sell their home anytime soon. But it’s important to keep the value of renovations in mind no matter what. A job transfer, major life changes, the economy, and unforeseen events can mean homeowners need to sell faster than they originally anticipated. Here are the renovations that likely won’t add resale value to a home.
Changing the layout of a home can be a short term expense that’s a gamble when it comes to long-term value. For example, one major design trend that has dominated in recent years is creating a large master suite. But Jean Brownhill, who is the CEO and Founder of Sweeten, which is a startup that matches property owners with contractors, suggests thinking twice in some instances. “In the moment, creating one big master suite from two neighboring bedrooms sounds like a good idea, but it’ll take buyers who are looking for a certain number of bedrooms out of the running. For resale, it’s always better to have more designated bedrooms, not less.”
Chiaramonte has also seen sellers run into trouble when it comes to changing the layout of a space. “Layout choices such as removing a bedroom or a bathroom for extra living/entertaining space or opening/closing a kitchen, can be a gamble from a value-add perspective since the next buyer may not need or want a double-sized living room, but want that bedroom you removed.”
Getting Rid Of The Bathtub
While large, luxurious showers have replaced soaking tubs for luxury bathroom renovations, getting rid of all bathtubs can turn off potential buyers. Depending on a neighborhood’s demographics, it’s important to at least consider keeping one bathtub. “Families with small children will most likely want a bathtub. Older homeowners will more likely want a walk-in shower for accessibility’s sake,” says Brownhill. “Think about your neighborhood demographics and who has been moving in and out. If it’s largely an older demographic, building a walk-in shower is probably a good idea. If it skews younger, keep that bathtub.”
While being passionate about a hobby will enrich your life, it won’t do anything for the price of your home. Broker Gerard Splendore of Warburg Realty shares, “Specialized hobby spaces will only appeal to other hobbyists who share your passions, whether jewelry making, pottery, or woodworking. I don’t know if anyone includes a home darkroom anymore but, if it is in the listing description, it may deter buyers from even coming to see the property.”
Overly High-End Renovations
While it’s easy for a homeowner to fall in love with a $10k fixture, it’s unlikely they’ll see any return on that investment, explains Chiaramonte. “While everyone loves a luxe renovation, sometimes you can go too far from a value creation perspective. Choosing the most expensive door hardware, internal light fixtures, etc, are examples of upgrades that you don’t get your money back on because people can’t see and feel the value added.”
Chiaramonte also says that homeowners often overspend on choices that no one else will notice but them. For example, an all slab marble bathroom doesn’t have a high return in comparison to a bathroom with one slab focus wall and matching tile throughout. “Buyers often can’t see the little details and differences (like slab on one wall, versus throughout) that add a lot to the cost line of the renovation,” she says. “Instead, they are only willing to pay a set premium for the overall effect which can be achieved in a more cost-effective manner. When you do these all out upgrades, they really are personal choices, not true investments.”
Renovations That Are Too Costly For The Location
While sellers can be overly enthusiastic about renovations to set their property apart from comps, this isn’t always a smart investment. “If you buy an apartment in a building or a house on a block that has never had a home sell above a certain price point (whether that is $1M or $10M), doing a renovation that puts your home far above that high watermark is a risky move,” states Chiaramonte.
Too Much Customization
Lavrenov recommends avoiding drastic cosmetic or custom renovations, such as wallpaper, fixtures made from expensive materials, or painting the walls with designs. “These types of features tend to be very personal to the current homeowner and don’t necessarily translate into added value for the next homeowner. My recommendation would always be for the seller to save their energy and money because these cosmetic renovations probably will not add any resale value,” he says.
Broker Gerard Splendore of Warburg Realty recently sold an apartment with a closet that was so customized, it devalued the property. The seller worked in retail and likely used one of the store’s designers to come up with a layout that was really only appealing to her. “It no longer felt like a home or a dressing area—it felt like a shop. Drawers covered one wall from floor to ceiling and a ladder was required to see what was in the drawers above eye-level. The new buyer tore everything out,” he says.
Then there are those cringe-worthy renovations that are red flags not to buy a property. Splendore inadvertently took a buyer to the home where the master bedroom featured a prefab redwood sauna in one corner, sitting on top of the wall-to-wall carpeting next to the bed. “The listing agent enthusiastically told us that it was included in the sale. We were not interested.”
But keep in mind that even subtle custom renovations can be a bad idea. Shelving, media consoles, and Murphy beds aren’t worth the price in the long run. “You want to steer clear of adding fixtures that the buyer/future homeowners might actually want to do away with as soon as they move-in or renovations that they feel actually take away from the living space,” says Lavrenov.
DIY is a great way to save money on more temporary aspects of a renovation such as painting, switching out hardware, etc, but not for more complex projects. “If you plan to sell your home down the line, avoid completing work yourself that should be done by a professional, whether that’s tiling your bathroom or skim-coating your walls,” says Brownhill. “These projects take a level of attention and detail that the average DIYer does not have. If not done professionally, a future buyer will surely notice.”
DIY can also go horribly wrong, turning a home into a money pit. For example, even a project as simple as installing your own dishwasher can be a disaster. If it leaks, it can damage flooring or worse, cause structural damage to the home.
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