What Home Improvements add Value?

DROP THOSE TOOLS! Before you convert that garage into your very own 70’s Disco Theater or install wall to wall teal carpeting, I want you to stop and think about what you are doing.

I know that teal carpet will complement your pastel pink and floral couch perfectly (!) But first you should ask yourself, “If I have to sell the day after I install the carpet, do I expect to get my money back?”

Really the acid test to any home improvement is whether or not you expect to get your money back. I like to put all home improvements into one of 3 categories:

• Maintenance
• Home Improvements to enhance the value of the home
• Home Improvements to enhance your lifestyle

Maintenance can range anywhere from painting the hallway to replacing the roof. Maintenance is a fundamental home improvement that must be done to keep the value of the home up.

People do not want to buy a home in disrepair. If they do buy it, they will pay less for it. Maintenance is an improvement that rarely if ever gets a dollar for dollar return on your investment. For example, if you replace the roof on your home for $8,000 prior to selling the house, you are not going to get an additional $8,000 dollars added to the sale price because the roof is new. The roof replacement falls under a responsibility of homeownership. Unfortunately besides being dry there is no large monetary benefit to be gained from most maintenance tasks. What it ultimately does is preserve the value of your investment.

Home Improvements focused on enhancing the value of your home can be tricky. These items could potentially give you the greatest return on your investment- but personal taste and regional preference can affect the outcome.

I recently held an open house in a 1980’s brick ranch home in a quiet Georgia neighborhood. The owners had gone in and updated the home throughout. They kept the colors neutral, installed more efficient double paned vinyl windows, upgraded the light fixtures, and refinished the hardwood floors. In the kitchen they chose to put in very modern space maximizing European style cabinets with stainless steel appliances and slate tile on the floor. Sounds great, right? I thought so! However the majority of the people walking through the home hated the kitchen. They found it to be cold, too dark, and too modern. Not only were personal preferences affecting peoples reaction to the kitchen, it was also regional preferences. The house was located in a conservative, relatively small community that prefers the “southern charm” style of home which is softer and has more decorative details.

If you want to make an improvement that will give you the possibility of greater returns, know your neighborhood and community. A good way to test yourself if your improvement is an investment is to use what I like to call ‘The Bathroom Rule’. Consider two houses: One has four bedrooms with one shared bathroom. The second is a four bedroom home with four bathrooms. If I added a bath to one of the houses, which home would benefit more?

Home Improvements aimed at increasing you personal enjoyment are the easiest of all improvements. These improvements make that quality of your life better. You make the improvement not for resale value, but for your lifestyle.
Sometimes these improvement choices mix with the other two categories of improvement. That’s just fine. So if you want to convert your garage into a 70’s celebration of Disco fever -complete with mirrored ball and strobe lights- go ahead if it makes you happy!

The big question, though, is how do you determine if the improvement adds value to the home? I like to use the outdoor swimming pool as an example. The ever eternal question, seems to be if a swimming pool adds value to a home. It depends; this is contingent upon personal preference and location. Not everyone wants to deal with a pool and that drops the value for them. However, there are people that love pools and this is a major plus to the home. Also, in higher end neighborhoods, homebuyers may be more capable of taking on the financial burden of maintaining a swimming pool. Generally speaking, I would say that if you are going to install a swimming pool, feel free to make the improvement for your enjoyment.

Keep in mind though, that if you install a $45,000 swimming pool and you happen to live across the street from the neighborhood pool, you will not get your money back. Typically people will not pay extra for what they can get cheaper.

If you would like to read more of my articles, please visit www.northofthesavannah.com/resources/

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