Home Improvements That Don’t Increase Property Values

10:04 Aug 2023
Home Improvements that Don't Increase Property Values

Not all home improvement ideas increase property values. In some cases, certain kind of home improvements can back fire and present more problems than solutions.

There is a major misconception that exist amongst homeowners that if you invest in home remodeling that you will receive your money back and then some.

Although in part this can be true, but the reality is that much to frequently a poorly conceived plan or an ill-advised renovation project can have quite the opposite effect on your homes return on investment.

This result usually happens when the owner does not do the proper due diligence on an idea or without soliciting the professional assistance of a designer, decorator or a contractor.

Albeit to save money or taking poor free advice from someone with bad information, an owner can find themselves harming the value of their property unintentionally. 

It is your responsibility as a homeowner to do the homework required to determine if your home improvement ideas are both practical and financially feasible.

It is always helpful to have a well informed trusted adviser like a seasoned general contractor to guide you through the process of evaluating your home improvement ideas.

Learn about the many owner mistakes and home improvements that are a poor return on investment

Home Improvements that Don't Increase Property Values

Over Designing and Building for the Neighborhood

This is by far one of the most common and frequent mistakes that owners make with their home improvement ideas.

Over designing and building for the immediate neighborhood produces less than the optimum market sales value.

This happens when owners have the money and have done their homework on the total price of the project, but have skipped the feasibility stage of understanding the impact on the future sales price of the home.

If the neighborhood does not allow for a premium market value sales price, it is ill-advised to design and build to a higher price point.

In other cases, this can result from a property owner electing to live out their days in their existing home due to the inability to recapture their home improvement investment.

They are not focused on their ROI, but rather the comfort and enjoyment of their home.

Depending on the actual neighborhood demographics, designing and building to satisfy your personal needs can result in a positive ROI if enough time passes prior to selling, but in adverse conditions may take far too long.

Home Improvements That Do Not Add Market Value to the House

This occurs when an owner expands the cost basis of the house without actually increasing the value of the property.

Examples of these types of home improvements can be major home renovation projects that the owner expects will boost the market value in preparation of selling a house in the short term.

Rather than catching up on general home maintenance like painting or making general repairs an owner may start replacing major replacement products like kitchen appliances or a bathroom remodel with the idea that this will increase the sales price.

This seldom results in a higher short-term sales price. More often the opposite results happen.

The owner undertakes a number of home improvements that increases the need to raise the sales price to recover the home improvements investments.

As a result, the house is now at a higher price with no significant difference observed by the potential buyers to warrant a higher price than the competing local houses.

The listed home sits on the market for a longer selling period causing the owners to finally drop their listing price in an effort to sell the house.

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Dramatically Changing the Architectural Style of a House

It does not happen that often, but an owner can purchase a house that they really do not like.

The owner may want a complete change the architectural style of a dwelling of their old existing house.

This is a very financially dangerous strategy. It is difficult enough to design a well-planned new house, let alone take on the huge challenge to dramatically change an existing home’s architectural style.

For instance, it is very difficult and expensive to change a traditional styled two story home into a modern contemporary architectural styled house.

Replacing windows and adjusting rooflines would be more expensive than just building a new constructed house.

In nearly all situations where an owner has made a severe architectural style change in the exterior / interior of an existing house, the buying market has not reacted favorably.

Not Preparing a Whole Home Design Plan Before Remodeling

This is also a common miscue that owners typically make. Charging forward with a kitchen renovation or bathroom remodel can have a negative impact on the design and flow of the existing floor plan.

Not preparing a comprehensive design plan can have consequential effects on the balance of the living space.

That is to say that if you opened up the kitchen to other rooms by removing walls, that the kitchens textures, materials and color scheme can overwhelm the room that is being incorporated. The room loses its identity and can detract rather than enhance the appearance of the new kitchen.

Another example of this is when the owner makes a huge investment in renovating and expanding the front entry to improve the front elevation but does not touch the foyer which now becomes undersized.

Selecting Poor Financially Performing House Remodeling Projects

Not all house remodeling or renovation projects are created financially the same.

There are very different financial results for every proposed home improvement project.

Attic insulation, a new front door and replacing garage doors have the best ROI of any of the house product replacement projects.

While new carpeting and extensive landscaping with an irrigation system typically perform poorly in recapturing your investment.

When it comes to major house remodeling projects, the best ROI are windows and doors, siding replacement and kitchen updates.

These home improvements traditionally return north of 80 cents on the dollar in the short term.

The worst performing financial home investments are swimming pools, sun room additions and general furniture built-ins.

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Over Doing Product Upgrading

It is also common for owners to do home improvements in phases or one piece at a time.

They will replace appliances, plumbing fixtures and counter tops to give the house a richer finished appearance, without updating any of the immediate surroundings.

This strategy can lead to very poor financial results when it is time to sell.

Although buyers enjoy and often demand these types of product upgrade features, they do not want to pay for them in the form of a required escalated sales price so the owner can recapture their investment.

This especially applies to investing in major remodeling projects and house product replacements in a house that the owner does not intend to live in for at least 5 years.

Items like roof replacement and AC compressors can also be questionable decisions if they are operating properly.

They may be written up by a house inspector for their age, but if they are working properly, it is in your financial interest to not replace them for the sake of selling the house.

Not Hiring a Professional Design Team

There are many DIY’s that do not want to spend the fees to hire a professional design and advisory team.

They either do not see the value or think that they can do just as fine of job as the pros.

This can be a major mistake if the owner does not have the required skills and experience to anticipate and navigate the issues that develop during house renovations.

Preparing properly for a major remodeling project is much more involved than having someone provide you a design drawing.

Pretty photo images and a CAD drawing might get you a permit, but will not address the issues that come from hidden defects or covered structural degradation that is revealed during demo.

Preconstruction planning is not just limited to preparing construction documents although they are an essential part of the execution plan, it also includes the experience of thinking through the process.

Major house remodeling will often impact the utilities and require opening an exterior wall to the elements.

If the owners have not made arrangements for these disruptions their families will likely be impacted by these inconveniences.

Cutting Corners

There is a major difference in carefully value engineering product and design features of a house remodeling project or the apparent cost savings measures of important design or construction features.

For instance, an owner wanting to avoid the extra cost or hassle of having their new addition reviewed by a structural engineering or building this addition without a building permit and the required inspections.

Cost cutting often results in sacrificing quality or eliminating best construction principles. An example of this would be conducting a major house renovation without repairing the foundation settlement problems.

You may save a good deal of money but your new finishes are likely to be severely affected by continued house settlement movement.

Selecting a Contractor Based on Cheapest Price

Although cost and value are very relevant decision-making factors, choosing the contractor with the cheapest price never translates to a good job.

Requesting a detailed proposal that specifies materials, brands and inclusions and exclusions is a must.

The proposal should list such items as permit fees, insurance provided and working hours with a schedule.

In addition, the proposal should quantify the size of the project and discuss in detail the process to execute the scope of work.

Remember not all home renovations or house remodeling projects are the same. Each project needs to be examined from multiple perspectives to determine if it will make sense for you.

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