Check out these four tricks used to get you to spend more (without you knowing it).
5 Minute Read
Fixing up your home is a lot of work. And most renovations don’t come cheap. But the wrong upgrade can cost you both time and money.
Even if you think you’ll be in your home for many years to come, life happens, and you don’t want to be stuck with a home you can’t sell. That’s why it’s always important to take resale value into account.
Let’s take a look at two examples of home upgrades gone wrong to see what we can learn.
Making It All About You
You don’t want buyers to look at your home and see a project. That’s why it’s important to fix what needs fixing before you put it on the market. It’s also why you should keep upgrades neutral to attract the most buyers.
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Take Julie and Tim for instance. They’re ready to upsize and know their well-loved home needs a fresh new face to bring in buyers. The biggest change they decide to make is replacing the worn-out carpet. There’s blue in just about every room, so they have a beautiful pale blue carpet installed throughout their home to pull it all together.
By the time the first open house rolls around, their home looks and smells like new. Julie and Tim feel confident they’ll get a full-price offer within the first week, especially since homes are selling like hotcakes around them.
But buyers come and go with no offers. The feedback is always the same: “I love everything about the house—except the carpet. It just doesn’t match our stuff.”
After two months on the market, they finally get an offer on the home. There’s just one caveat. The buyer wants to replace the blue carpet and asks Julie and Tim to foot the bill, doubling their carpet costs in the end.
Lesson Learned: Replacing the worn-out carpet was the right thing to do in Julie and Tim’s case—matching it perfectly to their personal décor wasn’t. Consulting a real estate agent first could have saved them a lot of money in the long run.
If there’s room in the budget, consider replacing carpet with hardwoods. New wood flooring ranks among the top projects that appeal to home buyers, with 91% of costs recouped.
2015 Remodeling Impact Report, National Association of the Remodeling Industry (NARI) and National Association of Realtors (NAR)
Ignoring Neighborhood Norms
Unless you plan to retire there, you’re going to need to sell your home someday. And over-improving your home—or installing upgrades that don’t fit with the rest of the neighborhood—is an easy way to waste cash.
Just ask Sam and Tara. They had big plans for their fixer-upper when they bought it five years and finally have enough cash to redo their small kitchen. They pour luxury into every detail—from marble countertops to commercial appliances.
By the time they’re done with their remodel, their kitchen looks straight out of HGTV. They’re super satisfied with their decision to invest their hard-earned money into a kitchen they know they’ll enjoy for many years to come.
But then . . . Sam’s employer relocates him to a different state.
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Sam and Tara make the cross-country move, convinced their fabulous kitchen will be a big selling feature. Unfortunately, they live in an entry-level home in an entry-level neighborhood, and most buyers want an entry-level price to match. Their home lingers on the market because buyers simply aren’t willing to pay an extra $50,000 for a fancy kitchen.
For six months, Sam and Tara pay rent on a tiny apartment in their new city, while still covering the mortgage on their old home. After a couple of significant price drops, they finally sell their home, recouping just a fraction of the cash they invested in their gourmet kitchen.
Lesson Learned: Sam and Tara got so carried away by their high-end renovations they forgot to consider what’s normal for their neighborhood. Before making any changes, take time to check out the homes around you so you don’t sink money into an upgrade that sticks out like a sore thumb.
Small upgrades can have a bigger impact: A minor kitchen remodel recoups 83% of the cost in resale value on average versus just 65% of costs recouped for a major kitchen remodel.
Remodeling Magazine’s 2016 Cost vs. Value Report
Get It Right the First Time
You want the sweat and money you pour into your home to be worth it in the end, right? Of course you do!
If you're looking to increase your home value or make it easier to sell, talk with a real estate agent. They can help you answer these two questions before spending a dime on upgrades.
- How likely are you to recoup your costs?
- Will the upgrade make it harder to sell your home?
An experienced real estate agent can help you figure out if the upgrades you have in mind are in line with what buyers want in your area. That way you can feel confident that the money you put into renovating your home is a smart investment.
Want to connect with a top agent in your area? We can help!