Increasing Home Value Through Improvements

This morning, Channel 3 has had a series of live segments talking about increasing home value through improvements. Unfortunately, more people were watching than will be reading this, but for the fortunate few who visit me here, here’s the big fact you need to know: spending the money simply to sell is pointless.

Upgrading that Pool

This item – remodeling an in-ground pool’s surface from plaster to pebble-tec – stuck out like a sore thumb on the list of increasing home value through improvements. Converting from plaster to pebble-tec costs somewhere in the area of a few dollars per square foot of surface area. One estimate I found, for instance, says it would cost a homeowner about $5,000 to convert a 1,000-square foot pool.

Here’s the rub. Most real estate agents and appraisers will tell you a pool adds somewhere between $8,000 to $10,000 maximum to a home’s value, depending on the condition of the pool. There is little difference in value between plaster and pebble-tec. And, while pebble-tec tends to have a more modern look, some people tend to prefer plaster because pebble-tec can potentially tear up sensitive feet. No, really.

So let’s do the math – you decide to spend $5,000 on a pool surface conversion on the front end and, on the back end, you gain little to nothing. Does this make sense to you?

Turning Dollars to Pennies

Other items mentioned in the segment included trading out laminate counters for granite and replacing carpet with tile or hardwood. These are the kinds of improvements that can add some value to a property and definitely can help a house sell quicker than those around it because of the upgrades – assuming the house still is priced well.

And that’s the kicker here. Know before you begin major changes that you’re likely only going to recoup a portion of the improvement cost on the back end. In other words, just because you spend $20,000 to redo the kitchen doesn’t mean your home’s value is going to rise $20,000. That’s why I always advise my clients to think about their own wants and comfort when upgrading rather than increasing home value through improvements.

One other note …

Problems with Overimprovement

Let’s suppose you own a home built in 1976. I always like to think of my parent’s old house for this. You can install granite counters, you can lay down engineered hardwood floors, you can replace the fluorescent lights with canister lights and you can otherwise rip through four aisles of Ikea making changes. But it’s still a home built in 1976.

Meaning?  The bathrooms still are going to be mostly function over form, not the spacious areas we see in newer builds. That kitchen likely still will be galley style and likely will lack an island, unless you buy one on aisle 7 at Ikea. There still may be that funky step-down living room. The bedrooms still are likely 10-foot square. No level of improvement, in other words, is going to change what was a very functional but fairly basic floor plan. Unless you really start going crazy on the inside, knocking out walls and such, but that takes you back to turning dollars into pennies.

There also is a basic concept of overimprovement. If you own a 40-year-old house in the Dobson Ranch and want granite counters, get them. But know up front that your average home buyer isn’t looking for that kind of upgrade in the majority of that area. Snail showers are awesome but they won’t return as much in an area where a simple tile shower is considered an elegant upgrade. This idea is akin to another real estate standby. You don’t want to own the biggest house in a subdivision, because the smaller homes only will pull your value down.

Structural Engineer, Anyone?

One final note from the segment. There was an item on the list suggesting upgrading a home’s asphalt shingle roof to tile. I don’t think I need to explain the physics of this too deeply but, for those who prefer a hands-on experience, try this. Go to a roofing supply store and pick up an asphalt shingle in one hand and a tile in the other. I’m fairly confident you’ll discover the tile is far heavier than the asphalt shingle.

And there’s the problem. The truss system on a house is designed to handle the weight of the roof it has, not the roof you may want. Put another way, the truss system you have holding up your shingle rook likely is insufficient to hold a full tile roof. To make this conversion, you’re likely going to need to bring in a structural engineer to make the needed changes to your home’s truss system to be able to handle the extra weight so your roof doesn’t end up in your living room.

Do I have to mention there is zero chance you’ll recoup even a significant fraction of the cost when you sell?

Increasing Home Value – Real Estate is Local

Ultimately, there’s no way a handful of local news segments can tell you what is best for you and your home. We don’t say real estate is local just for fun. Before you start thinking about increasing home value through improvements, talk to some experts. A real estate professional who has seen your house is a great start. Maybe even hire an appraisal to see what they think the value of your improvements might be.

The ultimate goal for most sellers is to net as much possible from their sale. So don’t make the mistake of crushing your profits months before you sell with some improvements that aren’t going to help you in the long run.

Jonathan Dalton

Jonathan Dalton is a 40-plus-year resident of the Valley and has been helping folks buy and sell homes since 2004. He can be reached at 602-502-9693 or info at allphoenixrealestate.com.