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2 satisfying home improvements with little resale value

Jim Mallery | Improvement Center Columnist | September 6, 2013

The day of reckoning is near. After many years in the same house and countless home improvement projects later, you're putting your house on the market. While many of those upgrades seemed wonderful at the time, are they going to come back to haunt you when prospective buyers size them up? Will their offers provide little to no return on all those investments?

Take the example of Jack, a consummate do-it-yourselfer, who spent the last 30 years remodeling his home. If there wasn't a project in the works, there were at least a couple in the planning, awaiting funding or spousal approval.

Now that it's time to sell his modest, four-bedroom, split-entry home, he's afraid some of those projects are likely to bite him when the dreaded "cost-to-return" ratio is considered. Sure, he's made some practical remodels--the kitchen, the bathrooms. Everybody agrees that they can provide good return on investment if the work was done well and with proper permitting.

But then there are the two that the Realtor says were great, big, huge mistakes.

Converting the extra bedroom to a home office

Not that adding a home office is bad: Remodeling Magazine says that on average, you can recoup about 43 percent of your expense. But subtracting a bedroom to create that office is bad--very bad--according to those in the know.

One popular mantra of Realtors is "don't subtract bedrooms!" Jack didn't care: the house was already "bedroom-heavy" as he put it. Removing one tiny one wasn't such a sin, was it? Jack went from five to four bedrooms. He wanted an office, and he didn't need the bedroom or a bedroom masquerading as an office.

"My house was really kind of nondescript," he said. "I wanted a library-slash-office with a special entry that made it look like a place of official-type work, other than paying bills and web surfing." So he eliminated the closet and moved the bedroom door directly off the formal entry. Then he laid down a Brazilian cherry floor.

"Removing the closet created room for lots of bookshelves, a large, L-shaped desk and a comfortable leather chair," he said. But once he took out the closet, the room officially lost its bedroom status. The project didn't cost much at the time, but now, with four bedrooms instead of five, it's going to cost him several thousand dollars off the listing price of the house. Because when it comes to home office renovations as Heather Levin pointed out on MoneyCrashers.com, "Most people only need good lighting, and room for…a desk and a chair. Unless you work at home full-time, you may want to skip this upgrade."

Jack tries to rationalize the bedroom issue and maintain his sense of humor: "If a buyer really wants a fifth bedroom, the office can be easily re-converted, either with an armoire or by framing-in a new closet. And if they have a teen-age son, the new door is closer to the refrigerator!"

Adding an in-ground pool and hot tub

"I decided to refinance the house when interest rates were low," Jack said. "I had the choice to be fiscally responsible and lower my payments, or take out a bundle of money and put in a pool. The pool won."

This modest project cost Jack around $35,000. When his house was appraised in 2003, he was told that it added only $5,000 to its value. "I wasn't too concerned about the resale value of the house at the time," he said. "With an adolescent daughter and a spouse who loved the sun, the pool seemed like a great idea."

But a neighbor who also happened to be a Realtor had warned him that many homebuyers are scared off by the dangers of swimming pools, especially if they have small children. And upkeep is expensive, not to mention that pools are rarely at the top of many homebuyers' wish lists in Jack's Pacific Northwest locale. He admits that he uses his pool only from the end of May to the middle of September. Otherwise, it is unheated and covered with a tarp to keep out debris.

Jack knows now that the pool probably won't come anywhere near returning the investment and may deter certain buyers; and the bedroom-to-office conversion may have decreased the home's value.

Still, he hopes that the other home improvements--the high-end kitchen with custom cherry cabinets, granite counters and travertine floors, as well as the modest, but modernized bathrooms--are enough to impress buyers. But according to Remodeling Magazine, "High-quality upgrades generally increase the value of high-end homes, but not necessarily mid-range houses where the upgrade may be inconsistent with the rest of the home." The kitchen may not bring the desired return on investment that Jack had hoped for, either.

Still, the projects have served him well while he's lived in the house, and therein lies the dilemma of many a homeowner. Is your house the place you and your family live and enjoy every day or strictly an investment? Most homeowners strike a balance between the two. In that case, Jack may have already reaped the benefits from his home improvements, regardless of what he realizes financially when his house finally sells.

About the Author

Jim Mallery, a semi-retired journalist and onetime registered contractor, has extensive experience remodeling, repairing and rebuilding homes.

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