Some home renovations yield a 100% or higher return on investment, such as replacing a dented garage or front door with a new, insulated and more durable model. Many home renovations like finishing a basement offer more than a 50% return on the investment. At the other end of the spectrum are home renovations that return only a fraction of the cost when you put your home on the market, and there are a few home renovations that actually have a negative ROI. Here are nine renovations that won’t necessarily add value to your home and may even hurt it.
A popular trend today is building large master bathrooms with sitting areas, a Jacuzzi or large hot tub next to a walk in shower. When you’re building a new luxury home, the spa-grade master bathroom is simply one more sign of an upscale home. As a home renovation, it may not help the value of your home. Luxury tubs installed in an existing home have a roughly 50% ROI. And the return on investment goes down if you increase the size of the bathroom at the expense of something else. For example, if you take out a closet or even decrease the size of the master suite in order to enlarge the master bathroom, you’ll lose the interest of a large percentage of your potential home buyers.
If you want to renovate the bathroom, do consider replacing that old tub with a shower head into a walk in shower.
New plumbing fixtures offer a high return on investment as you replace leaky faucets, rusted shower heads and toilets that don’t flush right. However, installing all new plumbing rarely returns the cost of the renovation unless your home’s old pipes would otherwise prevent the house from selling. If you have to repair a leaking hot water pipe damaged by a shifting foundation, that is considered a critical home repair, not new plumbing. The only exception to this rule would be replacing the hot water heater with a new, more energy efficient one. The elimination of the fear of a hot water heater failure yields a high return on the investment. Minor improvements in the bathroom like dual sinks and greater storage capacity have a high return on the investment.
Swimming pools have a low return on investment. The value of the swimming pool depends on the climate where you live. If the pool is only open three months of the year, the project may actually have a negative return on investment because most people will see it as a hassle and liability and inferior to having the space available for a swing set or garden. Others see the pool as a legal liability, since they have to put up safeguards to keep their children or the neighbors’ children out. In those cases where the pool is seen as attractive to many home buyers, such as in areas where the pool could be used more than six months of the year, the project may still have a low return on investment.
While a basic ten thousand dollar pool with minimal maintenance is attractive, a fancy hundred thousand dollar pool would only result in an extra $20,000 or so in additional home price. You can see this on a site like www.webuyhousesinarizona.com commanding more for homes with pools than similar homes in New York, because the swimming season is so much longer in Arizona.
The value of a home is as dependent on the standards of the community as it is on the amenities of the house. For example, a home with four bedrooms and three baths in a neighborhood of mostly three bedroom two bath homes is upscale. It commands more money than the smaller homes around it. The two bedroom one bath home in the same community is worth more than it would in an area with many two bedroom one bath homes because the neighborhood is seen as more desirable.
Going far beyond the norms of the neighborhood hurts the return on investment of the home renovation. Pouring another slab to add on two more bedrooms will cost anywhere from $30,000 to $80,000, depending on the size of the living space added and if you build another bathroom at the same time. If you end up with a six bedroom home in a three bedroom neighborhood, you’re not going to recoup that full cost because people compare the property to its peers.
If you check out a property website, you’ll see that the smallest homes in a good neighborhood command a premium while those that would be better suited to an executive estate surrounded by more affordable homes can’t receive anything near their asking price.
Replacing an old furnace or air conditioner with a new one eliminates a major concern for home buyers and will save you energy each month until you sell your home. This is true even if you install a new heater, furnace or air conditioner with an average energy efficiency.
Where many homeowners go overboard is spending money on eco-friendly projects that will drive off many potential home buyers. Those solar panels on the roof may seem like an investment, but others worry about the strain it puts on the roof, the maintenance involved in keeping them up and the hassle of dealing with a closet full of batteries. The rain barrel could be ignored or removed, but a fancy rain garden looks like a time sink.
A geothermal system that reduces HVAC costs, but prevents you from building anything in the yard isn’t considered valuable by many other buyers compared to installing more insulation in the walls and roof. Remodeling Magazine in 2016 found attic insulation to be the home renovation with the highest return on investment. Adding more insulation to the attic was the only home renovation project in that list with a higher than 100% ROI. It returned 117% of the cost of the project when the home was sold. The next best project was replacing an old door with an insulated steel door that deters criminals, and that had a direct 100% ROI.
When you convert an unfinished basement into a general living space, the value of your home goes up by roughly the cost of the project. Put in a few bedrooms and a working bathroom, and you see more than half that cost recouped when you sell the home. Turn the basement into a specialized room like a studio or workshop, and the ROI is much lower. Convert a bedroom into an office or studio, and home buyers will treat it as if the home has one less bedroom in the count and offer you less for the home. If you extend a living area or master suite by taking out a bedroom, the ROI of the project will be negative.
If you are in a luxury home, a chef grade kitchen may be expected. Conversely, putting a top of the line kitchen in an average home won’t see that cost recouped when you sell the home. Double ovens may be convenient for a large family, but dual stoves and ten thousand dollar refrigerators built into the cabinetry are luxuries most people will not pay for. Then there is the comparison to the rest of the home that buyers will make. A kitchen that would fit in perfectly on a cooking show is a negative if the bathrooms are in bad shape or the exterior of the home looks unmaintained.
A brand new refrigerator or dishwasher can be a selling point when selling the home. Buying a brand new suite of high end stainless steel appliances is unlikely to add a lot more to the value of your home at closing. Replacing flooring often has a good ROI if the floors are otherwise worn. For example, replacing ripped up linoleum with tile or damaged wood panels is a worthwhile effort.
Wall to wall carpeting is no longer the selling point it once was. Given the rise of asthma and allergies and the fact that your carpets are the biggest air filters in your home, and the fact that the house only contains carpets will turn off a number of home buyers. Carpet in the bathroom is seen as a negative by many home buyers due to the risk of mold growing in it. This is why wood floors are making a comeback, while tile floors remain popular.
Adding a deck to the exterior of your home has a roughly 50% ROI. For everyone who loves the deck as an extension of the living space, others will hate losing green space or be worried about having to replace the deck in a few years. Add in an outdoor fireplace or other amenities, and while you may enjoy it while you live in the home, others won’t pay you nearly as much as you spent in order to take ownership of it.
While you’re welcome to replace the toilet or bathroom fixtures, don’t put a spa-grade bathroom or chef grade kitchen in a standard suburban home. New fixtures and hot water heaters have a high ROI, but all new plumbing doesn’t unless you have to do this to sell the home. Swimming pools don’t add much value to your home because so many see them as a liability or a nuisance. No matter what you do, don’t over-build for the neighborhood or reduce the bedroom count to create a specialized room. Go for energy efficiency improvements everyone can appreciate like more insulation or a better HVAC unit. Wall to wall carpeting and decks are no longer the attractions they once were, so you can’t boost the value of your home by the cost of their installation anymore.
9 Renovations that Won’t Necessarily Add Value to Your Home – Architecture Lab