My Renovations Add Value, Right?
August 23, 2019
By Beth Jones, RLP®, AIF®, CFT™
Most people think when you make renovations to improve your home, you automatically increase its value and will get your investment back when you sell.
A recent article in Forbes suggests this is not always the case, and it offers some tips on what kinds of renovations will NOT allow you to recoup your costs. In general, these tend to be highly-personal customizations that make the home more attractive to you, but do not provide much value or benefit to a future homeowner who may not share your tastes or preferences. It’s important to keep the value of renovations in mind no matter what. A job transfer, major life changes, the economy or unforeseen events can mean homeowners need to sell faster than they originally anticipated.
Making major changes to the layout of the home is one to ponder. For example, eliminating a bedroom in order to create a large master suite is common. The problem here is that some buyers are going to want a certain number of bedrooms in their next home, and might eliminate yours from consideration. Or they may want that huge bedroom split back apart so they can have a guest bedroom for older kids who might be visiting.
Another example is eliminating a bathtub in order to create a large luxurious shower. Getting rid of all the bathtubs in your home can turn off potential buyers. Families with small children will most likely want a bathtub in the house, so consider keeping at least one bathtub.
Hobby rooms, where you display your passion for jewelry making or woodworking, etc. can be a deterrent as it is unlikely that the next buyer will share your same exact passion. And adding a swimming pool can be a gamble as that can be an extra liability and not likely an asset for families with small children.
Beyond that, some people overspend on choices that the next buyer wouldn’t even notice, like an all marble slab bathroom compared with a bathroom with one slab focus wall and matching tile. Customized shelving, built-in media consoles and Murphy beds tend not to be worth the price when the house goes on the market.
Think about the resale value as you design your renovation project. And if you just can’t live without that over-the-top kitchen, you will limit the field of potential buyers when you need to sell.
Beth Jones, RLP®, AIF®, CeFT®
Certified Financial Transitionist®
Registered Life Planner
Third Eye Associates, Ltd. is a Registered Investment Adviser