Ever wonder what appraisers think of the really cool improvements to your home? I recently read an interesting article written by appraiser Ryan Lundquist of Sacramento, Calif. that points out most improvements to your home will not increase your home’s value by the amount that they cost. He says, “Just because it was expensive, doesn’t mean it’s valuable.”
What his article says is true for our area too and acts as a good reminder for sellers that just because you spend money on home improvements, it doesn’t mean you will be able to increase the sales price of your home.
I’ve picked out a couple of his best points and added my perspective as an Atlanta Realtor® to give you the hard truth about home values. Before diving in, it’s important to note that features and upgrades may be considered more valuable depending on the price range and location.
Lesson #1 – “Buyers don’t often pay the cost of what the owner spent (except on HGTV)”
This is a common issue that many sellers have a hard time with. In fact, I’ve seen sellers get so hung up on over-the-top improvements not translating into value that their homes have languished on the market for years because they’re overpriced.
For example, say you recently upgraded your dated kitchen by installing premium granite countertops and custom cabinetry. Great choice! However, your buyers will not be willing to pay a premium for those upgrades. I often recommend sellers do more midrange upgrades, depending on the price range of your home, so their costs are more aligned with the perceived value.
I also recommend that if you are planning major upgrades to your home and you plan on selling within the next few years, that you give me a call and we can talk through how your upgrades may translate into value at sale…or not. I’m a Certified Pricing Strategist so I have unique training in this area. Having this information can help you make better decisions with your remodeling budget.
Lesson #2 – Buyers will not pay for typical upkeep and maintenance
Buyers —and Realtors® and appraisers—expect you to perform typical maintenance on your home. That means painting the exterior at least every 10 years; replacing the roof, when needed; refinishing your wood floors, etc. If you spend $10,000 on replacing an aging roof, it will not translate into $10,000 in added value to your home because it’s considered typical and expected maintenance. However, the reverse is also true; if your roof is aged, it could knock off much more in value because buyers will be taking a greater risk in buying your home.
Lesson #3 – Buyers will not pay more for features that are expected
If there are features in comparable homes in your neighborhood and/or price range that are considered typical, and you’ve recently upgraded your home similarly, those upgrades will not translate into dollar-for-dollar value. For example, you added a second bathroom to your three-bedroom home because you needed it. All the other homes in the area are also three-bedroom, two-bath homes. Well, that second bathroom is an expected feature, and buyers will not pay a premium because it’s a new bathroom.
Things that do add value with millennial buyers—a big block of the home buying population— are smart technology upgrades. Yep, according to an article I read about a recent survey, 86 percent of millennials are willing to pay 20 percent more for a home that includes smart technology, such as electronic home access, keyless locks, interconnected doorbells, and security systems controlled by smartphone apps.
And I’d caution you on taking advice from solar panel salespeople and such. For example, Ryan Lundquist points out that Zillow recently announced that homes with blue bathrooms sell for $5,400 more than expected. Really? At least it’s good for a chuckle!
Do you wonder what is considered valuable to today’s buyers? It depends a great deal on your neighborhood, price range, age of home, etc., so your best bet is to ask a Realtor®—me!—about what adds genuine value in your specific case. I’m happy to help!