Do you own a luxury yacht? A private jet? Or a portfolio of top stocks? If all your answers were no, your home is likely your biggest and best investment.
Just like that yacht, the jet, and those stocks, the home you own deserves attention and some degree of management for it to retain its value. Ideally, the changes and upgrades you make to your home when you live there will help your property appreciate in value.
To that end, the smart homeowner makes decisions the way the manager of a business makes decisions. They both look for ways to get a good return out of every expenditure.
Let’s review four common home improvement approaches that would not get a thumbs up from a profitable business.
Eliminating a bedroom
The number of bedrooms in a home is one of the major factors that establishes the home’s appraisal value, the market analysis, and the listing price. When people shop for a home, one of the first questions a Realtor will ask is, “How many bedrooms do you need?”
A three-bedroom home will always sell for more than a two-bedroom home when they are both the same exact size, built the same year in the same neighborhood, and have been maintained equally well. (P.S. Home staging and professional photos will help that three bed-bedroom sell for even more.)
Even if you have small bedrooms, do not be tempted to convert one to a closet, dressing room, or bigger bedroom. A good Realtor will tell you that you’ve just eliminated a group of buyers searching for a certain number of bedrooms at a certain price point. In other words, you just made it more difficult to justify your asking price.
Another common mistake homeowners make is converting a garage into a den or family room. A garage is an important selling feature. And, that room will always look like a room that used to be a garage!
Shoddy DIY work
Any home improvement project you tackle should match your skills and budget. Some DIY projects are really DDIY projects – Don’t Do It Yourself. If you are considering a new project, ask yourself if the cost of hiring a professional might be justified.
For example, if you have never tiled a floor before, think about whether you have the patience and persistence to educate yourself about the right steps in the right order, the correct products to use, and the degree of difficulty. Will future buyers see crooked tiles when they enter your all-important front foyer?
Seeing something done on HGTV or YouTube doesn’t always make you capable of turning out professional quality workmanship. There are certainly times when DIY is a great choice, when you have the time and skill and money to do it the way future homeowners would approve.
Home improvement projects should be safe, made of good quality materials, and done by someone with experience. When a house hits the market, things like amateur carpentry, sloppy house painting, or unfinished projects will be noticed. Some buyers will ask for an allowance or price reduction to fix these things.
Electrical or plumbing upgrades need to be done by a licensed person to be sure they meet code. You can do minor repairs, but if your home has extensive plumbing or wiring work done, home buyers have a right to ask to see contractors’ licenses before they buy.
Too Much Customizing
If your immediate neighborhood does not justify your upgrades, you have crossed the line into “over fixing.” The same is true of remodeling projects that aren’t appropriate for the age or style of your home.
If no one in your town, in your home’s price range, has a tennis court or an orchard or swimming pool or an exotic gourmet kitchen but you want one, don’t expect to recoup your out-of-pocket costs for these amenities. Just enjoy them.
The sensible approach would be to install standard, classic features like hardwood floors and white bath fixtures. Sound boring? It won’t be once you furnish your rooms to express your personal taste and lifestyle – all the furniture, wall colors, rugs, artwork, bedding and lamps you like.
When you eventually do list your home is the time to nudge your decor back into the realm of “everyman’s taste,” removing décor items that might be too distracting or confusing. You don’t need a professional home stager to get your home market ready.
Ignoring the Advice of Pros
Talk to any licensed home inspector or real estate appraiser and he will tell you horror stories of homeowners who made major renovations without considering what future buyers will see as deal breakers.
Examples might be a 4-bay garage that’s larger than the home, a low-ceiling porch without heating and cooling that’s been converted to living space, a second floor bathroom when the floor won’t support the weight of a water-filled tub, or an addition with a roof line that’s architecturally just plain ugly.
The best advice is to go with industry standards for style and safety. Don’t be the crazy person on the block who has to have a house painted Pepto Bismol pink, or that guy who –without checking with an expert – removed a supporting wall in his home to create the open floor plan he envisioned.
Takeaway
Many homebuyers think they will live in their home forever. That’s a myth. According to the US Census Bureau, only 37 percent of Americans live in their homes more than 10 years. Yes, your home is a source of pride, and a place to relax and to spend time with family and friends. But it’s also an investment in your future. Are you treating your home like the investment it is? You know, the way you would that yacht.