One reason for purchasing a home is that it is YOUR home – you can make changes to it, make it your OWN. And many homebuyers DO renovate – it may be something as simple as replacing a faucet or something as major as adding a new wing to the house. According to a survey by the website Houzz.com, homeowners who renovated in 2017 spent an average of more than $60,000 on the renovations (a lot more than the cost of the faucet….)
Some renovations are made necessary by our life circumstances and by the aging population, like a chair lift or elevator. Others are purely for enjoyment – like adding a swimming pool or a man cave (or she shed). But in every case, we will typically choose what appeals to us personally in terms of finishes and space since after all, its our dwelling we are talking about.
No matter how unique your taste, however, you would probably like to think that the renovations you make will add at least an equivalent amount of value to the property as the renovations cost. (in other words, if you spend $10,000 you expect that your property will be worth at least $10,000 more when you go to sell). But that is by no means guaranteed. Property is a very personal thing. What appeals to you may not appeal to the person looking to purchase the home when you go to sell.
In addition, fashions are by definition time sensitive. What is in vogue today may be passe by the time you go to sell.
In other words, cost does not equal value. The cost of the renovations does not necessarily equal the increase in value for your property as a result of the renovations. In fact, sometimes there seems to be very little correlation at all. And sometimes the renovations you choose may actually decrease the value of your property. Say, for example, a very unusual and vibrant tile that you LOVE, but which few others would want. Or even if they love it, they wouldn’t want in their home because it is so unique and it sn’t chosen by them. In these cases your renovations may actually result in a net loss of value. If what you have done is personal, or has become dated, or just simply isn’t to the purchaser’s liking, that purchaser will devalue the property by the amount the purchaser feels they will have to spend to take out those renovations and redo the property to their liking.
For instance, our buyers Jill & Brian had been looking in Ashford Park for quite some time for a new home for their family of four. They have two young children and were drawn to the neighborhood by the number of families, by the walkability of the neighborhood, and by the elementary school. When the house that seemed exactly “right” for them – one that checked all their boxes – came up for sale we ran over there to check it out.
The home WAS exactly right for them – except for one thing. The kitchen had been redone in dark, masculine shades. The cabinets were a dark brown, almost black, and the granite countertops matched the cabinets. While cabinets can be repainted, the granite would need to be replaced to suit Jill & Brian. So for them, the home was worth less than it would be otherwise, because they needed to factor in the cost of the renovations they felt were necessary to make the home theirs.
So if you are planning to renovate your home, unless you are not worried about resale, you probably want to consider whether or not the renovation will add value when you go to sell. The renovations that are shown to add the most value upon resale are those of master bedrooms and kitchens, and the most popular renovations, at least at this time, make space lighter, brighter, and bigger. Buyers also like open kitchens which become more a part of the living space.
One thing you can do in your research is head to a popular new home development in your area to examine the standard finishes the developer is installing. This can indicate what buyers like and are purchasing in today’s market. So that might be a good place to start if you’re determined that your renovations must add value to a subsequent purchaser.
As a general rule, such finishes are more neutral. Think whites, beiges, greys…. A more neutral palette that a subsequent purchaser can then individualize through unique furnishings, artwork and the like.
If you are renovating YOUR property, why not do simply what appeals to you? That certainly seems to make sense if you’re not worried about selling the property in the near future. But consider this also: many a homeowner has renovated a home in a unique and personal style, thinking that they will stay in that property for years to come, only to find that they are forced to move for some unforeseen reason. Or perhaps they discover that what was in vogue the year that they renovated no longer appeals even to them just a few short years later.
For all of these reasons, it makes sense to consider carefully the future impact of what you are doing to your property. You may then make the conscious decision to do something bold, even crazy, with your house – that’s your prerogative, of course, and who is to say that there’s not a buyer in the future who will love exactly what you’ve done? But getting other opinions and thinking carefully about the future of your home cannot hurt… and may increase your profit down the road.