Military families typically go through the home buying/selling process more often than the average family. The PCS cycle alone causes us to move every two to three years. But a military move isn't the only reason we sell our homes. We have ordinary reasons to sell, too, like simply changing neighborhoods or parting ways with a rental property we invested in.
When it comes to home selling, you want to turn the largest profit you can, which may cause you to think that the more attractive updates, modifications, and renovations you make, the better, right? Wrong. Or, more accurately, highly unlikely.
While there are plenty of updates you can make to increase the value of your home, others won’t. If you’re not careful, you’ll find yourself over-renovating your home beyond its value and wind up burning money that you won’t see again.
So, take some time to brush up on the process. Before you start getting your home ready to sell, let’s look at a few things you can save time and energy by not doing.
The Risk of Over-Improvement
One of the best things you can do before undertaking any renovation is to determine a home’s existing price point. What is the home currently worth on the market? You can get a ballpark estimate through Automated Valuation Modules (AVMs). However, since it can’t account for the condition of the house, renovations, landscaping, and more, a local real estate agent can provide a more accurate home value estimate.“It may come as a surprise, but over-improving a home can actually make it harder to sell, especially if it’s the most expensive one on the block. A house that is priced too far above what other homes are selling for is going to be met with one question: 'Why?' What is it about this home that has it priced above comparable homes?
If renovations out-price what the market will actually bear, the house will be difficult to sell at a price point to recoup money sunk into it. If a buyer is paying top dollar in comparison to other homes, where is their future appreciation going to come from? If no buyer can answer that question, a house is overpriced for its market and will not sell.
If you are evaluating renovations, choose areas that historically provide a solid return, such as kitchen and bathroom updates. Aim for clean, simple design elements using construction methods and materials that can easily be replaced or duplicated if damaged.
One of the best things you can do before undertaking any renovation is to determine a home’s existing price point. What is the home currently worth on the market? You can get a ballpark estimate through real estate search engines, but a local real estate agent will be a more accurate in-the-know information source.
It costs nothing to ask what a home, either yours or one on the market, is worth. A little strategic thought can determine which renovations your family can both enjoy and recoup.”
- Kristi Adams, 6 Over-Improvement Risks to Avoid When Renovating Your Home
But how do you know where the line is? Which updates will pay for themselves, and which ones will leave a hole in your pocket?
Understanding the Market
Become familiar with comparable homes in your area to avoid over-improving your property. When you’re looking at properties nearby, look at features like square footage and the number of bedrooms and bathrooms.
Age and Condition of the Home
When you’re comparing your home to others on the market or those that have recently sold, refine your search to those built within just a few years of your own.
And condition refers to more than how fresh the paint is. What's the age of the HVAC and roof? Cracks in the foundation, water damage, and a history of pests are all issues to consider when comparing the condition of your home to others.
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Listing Price vs. Sale Price
Don’t get swept away by unrealistic price tags. A comparable home might be listed for much less than yours, but it's your job to find out how much it actually sold for. Just because the asking price is attractive doesn’t mean that the property was appraised and sold for that amount.
Amenities
Aside from the bones of the house, what do other homes have that yours doesn’t, or yours has that theirs doesn’t? Features like a swimming pool, gourmet kitchen, hot tub, storage shed, finished basement, additions, high-efficiency windows, and new roof are all amenities worth noting.
You’re not looking to necessarily match all the features of other properties in the area. You’re out to estimate the value of your home and how long yours will be on the market as is. From there, you can take a look at how to increase value and get more out of your home sale.
Location
Location is about more than the area of town or specific neighborhood in which your home is located. It's also about its position within the neighborhood. For example, homes located on the golf course or with a view are going to be worth more than those backed up by a cement wall. This is true even if your home is in better condition than theirs. Conditions and accommodations can always be adjusted—the location can’t.
Note: As you look at properties listed on the market or others recently sold, don't look too far back. The market fluctuates, and while you might think that the more properties you have to compare, the better, that’s not always true. One small, consistent pool of homes to compare is much better than a large one full of contradicting prices, time on the market, and differing features.
You’ll also want to consider the real estate market as a whole. A seller’s market might mean that you can get away with fewer updates and home improvement projects, while a buyer’s market will likely demand more renovation projects to prepare your home to sell.
Updates You Can Skip When Selling Your Home
1) Kitchen remodel.
While a move-in ready home will be worth more than a fixer-upper, kitchen renovations aren’t something home buyers necessarily shy away from.
The reason, as Sasha Brown-Worsham shares in Selling Your Home? 5 Things to Not Bother Fixing First, is that “many buyers these days look forward to remodeling these 'fun' areas—plus, trying to second-guess what they want and have it there waiting for them is just plain unrealistic, given all the home decor styles there are to choose from today.”
Photo from Canva
Many home buyers don’t mind doing some work to make the heart of the home just right, not to mention that they may welcome the ability to make their own customizations and use their home loan to cover the added expenses.
The 2022 Cost vs. Value Report found that a minor kitchen remodel was listed as number three of the top 10 home projects with the highest return on investment (ROI). You may be surprised to learn that the remaining top projects were all exterior.
However, there are a number of experts who urge home sellers to upgrade an outdated kitchen at all costs. Consider a kitchen remodel if comparable homes in your area are all updated and your home value is estimated significantly less than a remodel would cost.
2) Partial updates.
If you’re going to take on a kitchen or other room remodel, don’t choose just one thing to update. You have to go big or go home, as they say. Installing quartz countertops will only highlight the outdated cabinets and linoleum flooring that you decided to leave.
Even a coherent, outdated space will likely look more appealing than a disjointed, slightly newer one.
3) Finishing the basement.
While the extra living space can add value to your home, finishing a basement is a great way for new homeowners to add their own personalized touch to the property.
Home buyers may welcome the opportunity to tailor a space to their needs and hobbies. If you decide to finish the basement before listing the property, do it simply. Allow the home buyers to walk in and imagine the space customized to their own interests. This means forgoing the in-law suite, bar, and home theater.
Photo from Canva
4) Swimming pool.
Does a Pool Help or Hurt Your Home Value? Seasoned agent Donna Cox shares a helpful bit of insight on the matter:
“The return on a home seller’s investment won’t be worth what they paid for the pool if they’re only adding it in order to sell their home. This return is also going to be less than other home renovations.”
While adding a swimming pool and hot tub might help you match other listings in the area, the return on investment is likely low. They’re expensive to install, and many home buyers aren’t interested in the added responsibility.
5) Space conversions.
Converting your garage into a gym or extra living space may sound like a good idea, but proceed with caution.
"Many people search for houses with a garage, and what they’re looking for isn’t a gym or an extra living space — they’re looking for a garage to serve its primary purpose of housing cars and storage items.
If you must use your garage space as a gym or as extra living space, be sure future homeowners can easily and inexpensively remove the renovations." - Autumn Rose, 20 Home Renovations That Will Hurt Your Home’s Value
Photo from Canva
6) Replacing a bedroom.
The same goes for a home office conversion. Even though we’ve seen an increase in remote work since the pandemic, a home office isn’t a necessity on everyone’s list and can be a costly mistake if you convert space to accommodate one. If your “home office” space is really a bedroom, don’t advertise it as such. Bedrooms are often equal value, so list the largest number of bedrooms you can and let potential buyers imagine what they can do with the extra room.
In 5 Home Upgrades That Aren’t Worth the Money, we learn that.
"In the hunt for space, many homeowners start knocking down walls to expand a walk-in closet or increase the size of the master bathroom. While you might think that a oversized closet or massive bathroom will help sell the place, you should never do this at the expense of limiting the number of bedrooms. A three-bedroom house is going to sell better than a two-bedroom home, no matter how large the closets are.”
Before renovating your property to sell, take time to think strategically! Study the market and ignore expensive updates with a low return on investment.
For home upgrade ideas that are worth the effort, check out our helpful post, Which Home Renovations Are Worth Your Time and Money?
Get even more home selling help with our free resource below, A Guide to Selling Your Home.
