Seven Renovations That Could Backfire and Hurt Your Home’s Value

If you live in an area where homes are selling like hotcakes, you may be feeling exceptionally confident in the value of your property. And as a result, you may be considering a home upgrade you’ve been dreaming of for years. Perhaps you want to add a pool, or maybe you want to add more square footage to your home. Or maybe you’re just aching to do something because you’ve been watching way too much HGTV.

Before you dip into your savings account or apply for a home equity loan, experts say you should think long and hard about your financial investment and your choices. Just because a specific upgrade seems like a good idea right now doesn’t mean it will pay off later. Plus, there are some upgrades that many homeowners regret almost instantly, either because they wind up overspending or because they were a bad idea in the first place.

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    Seven Home Improvements You May Live to Regret

    Home remodelers, beware. Spending money to “upgrade” your home doesn’t always pay off, and it could even hurt your home’s value in the long run. Here are some upgrades the experts suggest you steer clear of:

    #1: Garage conversion

    A garage conversation can seem like a good idea if you need more living space and don’t mind parking in the driveway or street. However, this remodeling project comes with plenty of risk. Not only are garage conversations often done poorly and in a way that makes them look obvious — and awkward — but you can face problems if you remodel your garage without getting proper permits.

    Vincent Nepolitan of Planet Home Lending points out another potential problem: When you go to sell, you may find a more limited pool of potential buyers. Not having a garage for buyers to park their vehicle can limit the number of people you get through the door, thus preventing you from getting the sales price you want for your home. This is especially true in areas where all the neighboring homes have garages, Nepolitan says, and in areas with hard winters or sizzling-hot summers.

    #2: Converting a bedroom for another purpose

    With more people working remotely than ever before, it may seem like a good idea to convert a spare bedroom into an office. This can be a good idea if you only make superficial upgrades like replacing a bed with a freestanding desk. But there could be financial consequences if you pour a lot of resources into the renovation or make structural changes — converting the closet into a built-in desk area, for example — so the room no longer qualifies as a bedroom afterward.

    The reason for this? Homes with more bedrooms can fetch a higher sales price and tend to attract a larger pool of buyers, says Georgia-based real estate investor Shawn Breyer. A buyer with two children might insist on having three bedrooms, for example, and be unwilling to consider any two-bedroom homes. They might also be willing to pay a premium to secure a home with a fourth bedroom they could use as a guest room.

    The bottom line: When it comes to a home’s value, the more bedrooms the better — so don’t think long and hard before getting rid of one.

    #3: Adding a pool

    It’s easy to think having a pool would make your life more fun and more relaxing. After all, what’s better than spending a lazy day floating in the water with a cold drink or a good book?

    Unfortunately, the reality of pool ownership doesn’t always line up with expectations. Pools may be great for summer, but they’re often expensive to maintain over the long haul, says CEO of Patch Homes Sahil Gupta, and require a lot of work, from adding chemicals to cleaning and maintenance.

    And, you may not find your pool quite as fun in a few years’ time. Gupta notes that pools tend to go unused during winters and once kids leave the house, and that they may eventually become a safety hazard for grandkids or pets. (In fact, a pool can increase your home insurance premiums.)

    Finally, only a limited number of buyers will even want a pool in certain parts of the country, so you might wind up selling your home for less than you wanted or waiting longer for a buyer as a result.

    #4: Kid-related upgrades

    While pools are commonly added by families with kids, there are other kid-related upgrades homeowners may rush into without thinking them through, says Julie Gurner, senior real estate analyst at TheClose.com. “Some upgrades consumers tend to regret are, for example, linked to children and their temporary place in the home,” says Gurner.

    A solid example would be adding a basketball court to your backyard because your child is really into the sport. “Sports courts require maintenance and take up a large portion of the backyard recreation space,” says Gurner. And not every buyer will want a basketball court in their yard when you go to sell.

    Before you go through with a costly upgrade that may only be needed for a few years, consider whether there are less permanent and less costly options available.

    #5: Trendy interiors

    Gurner points out another mistake that’s often fueled by HGTV mania — following fads and planning your home upgrades around what’s currently “hip.” Gurner points to the recent shiplap craze as an example, noting that the wooden-board wall cover that’s trending now may be the “wood paneling of the future.”

    Other ubiquitous home improvement trends that could leave you wincing at your choices later on include stainless steel appliances, open kitchen shelves, brass accents, and basically anything that’s shabby chic. When it comes to fashion and trends, whatever’s “in” now is always on its way out at some point.

    #6: Textured walls and ceilings

    Speaking of outdated trends: Textured walls are so 1980s, but some people who never got the memo still slap a layer of popcorn on before they paint, even if it’s just to match other rooms in the house. But Breyer says that adding texture to walls and ceilings is a mistake — partly because it can turn off potential buyers when you go to sell, but also because it’s expensive to remove if you change your mind.

    Breyer says that, most of the time, it costs $1 to $2 per square foot of space to have textured walls refinished with a smooth surface. Plus, you’ll also face the cost of repainting your walls and/or ceilings after the removal is complete.

    #7: Over-improvements

    Real estate agent Justin Moundas says that over-improvements tend to leave homeowners regretting their choices. “It never pays to be the nicest or biggest house on the block,” he says. “Often people regret investing so much into the home that it can’t be justified in the resale value for the area.”

    According to Remodeling Magazine’s 2018 Cost vs. Value Report, some remodeling projects that don’t offer a great bang for your buck include big-ticket investments like backyard patios (47.6% return), a master suite addition (48.3% return), a major kitchen remodel (53.5% return), and the addition of a bathroom (54.6% return).

    Each of these projects may help you enjoy your home while you live there, but they may leave you wishing you had spent your money elsewhere if you move within a few years.

    If you want a home that’s a lot nicer than the one you have now, Moundas says upgrading to a different home can be a better deal than remodeling. By finding a different home that already has the floorplan and upgrades you want, you can avoid the hassle and stress of remodeling along with runaway costs.

    [Related: Should You Remodel or Move?]

    Seven home improvements that can increase your home value

    Fortunately, not all home improvements are money pits. There are some smart renovation moves you can make that not only make the home more enjoyable to live in, but also add value when it comes time to sell. These seven renovations that increase value are worth considering.

    #1: Minor bathroom remodel

    If you replace your tub, tile, sink and fixtures, you can breathe new life into a bathroom. Even better, a turnkey bathroom is really appealing to potential buyers. According to HGTV, you may recoup as much as 102% of your investment in a minor bathroom renovation.

    #2: Updated landscaping

    Good curb appeal can add about 5% to the value of your home. And bad curb appeal? Well, that can kill a deal before it begins. Given how picky buyers can be, you may drive away potential bidders before they cross the threshold of your home.

    Updating the landscaping is a relatively inexpensive way to update the exterior of your home while adding significant value. Don’t worry about installing a new water feature or tropical plants. Fresh sod, new flowers in the beds and a fresh trim will do.

    #3: Attic room conversion

    In the western United States, you can recoup as much as 105% of your expenses when you convert your attic into another bedroom. In places like the midwest, where acquiring square footage is not as much of a challenge, you may not see as high of an ROI. Still, converting your attic to usable space is one of the best renovations you can make.

    Turning attic space into usable living space attracts everyone from large families who need extra space to store a moody teenager to professionals who would love a spare bedroom or office. The bottom line is that transforming unused space filled with spiderwebs into an appealing area will help attract new buyers.

    #4: Patio addition

    If you have a backyard, you’re just a few boxes of pavers away from a new patio space. That being said, the cost of installing a new patio can be upward of $6,000 (remember you need to grout, cut tiles, etc. in addition to paying for materials). While this might seem expensive, a patio adds an average of about $6,500 in value to your home. What can we say — people love to sit outside.

    Increase the value of your property even more by adding lighting, waterproofing and other add-ons that don’t take much time but add convenience for future owners.

    #5: New home office

    As mentioned above, you don’t want to take away a bedroom from your floorplan to create an office. This is a no-no in any market. If you can transform an upstairs landing or part of a bonus room into a designated office space, though, you can add value to your home. The addition of grounded outlets, data ports and other conveniences means a lot to people who work at home.

    Some buyers may be willing to spend nearly another $2,000 on a home with a home office. Consider soundproofing and access to a landline to create a work-friendly environment that attracts buyers who need a professional setup at home.

    #6: Bathroom addition

    Bathroom additions can yield a ROI as high as 130%. The one possible hold up? Enough floor space. If you plan on adding an additional full bathroom to your home, you’ll need at least 35 square feet to work with. Still, if you can spare the space, buyers will love having another bathroom in a home. You may see even more value if the comps in the area have fewer bathrooms than your house will with the addition.

    #7: Energy efficient windows

    Energy Star notes that homeowners can save up to $583 per year on heating and cooling when they switch to more efficient windows. This means your new panes will immediately start to pay for themselves. What’s more, you may be able to claim a tax credit the year you have them installed. That adds to the ROI before you even sell your property.

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    Holly Johnson is an award-winning personal finance writer and the author of  Zero Down Your Debt. Johnson shares her obsession with frugality, budgeting, and travel at ClubThrifty.com.

    Holly Johnson

    Contributing Writer

    Holly Johnson is a frugality expert and award-winning writer who is obsessed with personal finance and getting the most out of life. A lifelong resident of Indiana, she enjoys gardening, reading, and traveling the world with her husband and two children. In addition to The Simple Dollar, Holly writes for well-known publications such as U.S. News & World Report Travel, PolicyGenius, Travel Pulse, and Frugal Travel Guy. Holly also owns Club Thrifty.

    Reviewed by

    • Angelica Leicht
      Angelica Leicht
      Mortgage Editor

      Angelica Leicht is an editor at The Simple Dollar who specializes in mortgages, mortgage refinancing, home equity loans, and HELOCs. She is a former contributing editor to Interest.com and PersonalLoans.org.