Many homeowners planning to sell their property invest in expensive renovations with the aim of increasing their home sale value. However, some improvements can have the opposite effect and hurt a property’s market value if not properly researched or executed.
Whether they are done to reflect a homeowner’s personal preference or a specific area’s trends, home renovations are a costly investment that should not be taken lightly. Here are some of the most common renovation mistakes homeowners make when trying to up their property value and tips on how to avoid them, according to 12 real-estate experts and members of the Forbes Real Estate Council.
1. Forcing Your View On What The Property Should Look Like
Many homeowners overcapitalize on renovations as they focus on making the property look like they want it to, instead of appealing to the target buyers or tenants. Also, you shouldn't invest in real estate that's where you would want to live but rather where the numbers and profits make the most sense. This could sometimes mean investing in "undesirable" markets. - Engelo Rumora, List'n Sell Realty
2. Focusing Only On Kitchen And Bathroom Renovations
- Attic insulation: On average you will see a 108-116% ROI.
- A new garage door: On average you will see a 92% ROI.
- Steel entry door: On average you will see a 91% ROI. Kitchens and bathrooms are still good, but these are even better!
- Bob McIntosh, Arcane Properties
3. Doing Renovations That Lead To Property Overpricing
Homeowners, whether they intend to sell their home soon or not, should consult with a real estate agent to ensure that the plans they have for the renovations do not price them out of their neighborhood. In other words, granite is hot for counter surfaces, but if most of the neighborhood is upgraded laminate at most, installing granite may provide the homeowner no return on investment in the future. - Michelle Ames, HorsePower Realty
4. Not Opting For Universally Appreciated Investments
Not all investments in a home will equal the same amount of increased value. For example, a swimming pool in the Northeast adds little to no value to your home's resale value. Focusing on value added that is universally appreciated, such as updated kitchens, baths and master suites, is the best way to get a return on your home improvement investment. - Matt Rodak, Fund That Flip, Inc
5. Not Knowing When To Stop Upgrading
Most homeowners think they must upgrade all things. The key is to find the 20% upgrades that will add 80% of the value. Most of these will be cosmetic and much cheaper than expected. - Jake Brackenwagen, Brackenwagen Real Estate Investments, LLC
6. Not Hiring A Professional Interior Designer
The biggest mistake I see is when people don't spend the extra money to hire a professional interior designer and end up spending money on things that don't really add value and are distasteful to most potential buyers. Water features or pools are also a bad idea, as not every homeowner wants the responsibility of owning a pool or water feature. With potential lawsuits and utilities on the rise, it’s not a wise investment. - Chris Ryan, Luxury Lifestyles Group / RE/MAX Crest Realty Westside
7. Overspending On Expensive Add-On Enhancements
Overleveraging their homes using home equity lines of credit to construct add-on enhancements (e.g., swimming pools, alternative green energy, extensive additional landscaping / garden parks) that often only add incrementally to value but cost a great deal up front and sometimes continue to add significantly to annual maintenance, thus further draining available liquidity. - Bradley Hutter, MIG Commercial Real Estate, LLC
8. Adding A Swimming Pool
One of the biggest mistakes I see is adding a pool. A pool addition rarely increases the value of the home more than the cost of installation, and should be avoided if trying to get a return on investment. - Jeremy Brandt, We Buy Houses
9. Failing To Complete The Work Before Refinancing
Oftentimes we see homeowners start a renovation project, run out of cash midway through, and then need to do a cash-out refinance to finish. Usually the plan is to do all the work, then refinance with a higher appraisal amount. The entire project needs to be completed before a refinance can be done. If the appraiser comes out to the property and it isn't finished the loan will not fund. - Bill Lyons, Griffin Funding
10. Choosing DIY Work Over Professional Help
I see homes devalued every day by poor workmanship and DIY projects gone wrong. Projects that involve the structure of the home should be left to the professionals. At the time of sale, an inspector will easily notice poor workmanship and there is a good chance redoing the work will cost double what it would have cost to just do it right the first time. - Hillary Hobson, Highest Cash Offer
11. Spending Too Much On Materials And Too Little On Craftsmanship
Homeowners often choose expensive materials, thinking they will translate to higher property value, only to cheap out on installation. This is a mistake because poor craftsmanship can ruin the value of even the best materials. The good news for homeowners is that the reverse is true as well: quality craftsmanship can make budget-friendly materials look expensive. My advice: Buy well and hire help. - Betsy Repaske, DwellHop Real Estate
12. Investing In Renovations Without Actual Resale Value
The No. 1 mistake homeowners make when doing renovations with the intention of improving their property value is focusing on the improvements they want without considering whether those “improvements” have actual resale value. Consider whether the improvement is universally desirable. Real estate is an investment. It’s not just about the next owner, but rather every owner that comes after. - Avi Spielman, Joon Properties
