14 mistakes that will kill your home's value
By Christopher Solomon of MSN Real Estate
Your
home is your castle, and you can do what you want with it. Right? Sure.
But if you want a good return on the dough — and sweat equity — you
pour into Home Sweet Home, you should make sure those changes are smart
ones.
Too often, that’s not the case. Real-estate agents and
appraisers say they regularly see homeowners make changes that don't
increase the value of the home by much, if at all. Some renovations or
alterations can even drag down the value of a home. Then, of course,
there is all the damage that a
lack of upkeep and upgrades can do.
Check out these 14 home-improvement blunders and our tips from the experts on how to steer clear of them.
1. Going overboard for the area
The common mistake: A common mistake homeowners make is improving a home
too much
for the neighborhood, turning the home into a pricey outlier. How much
is too much? That depends. "If you're in a really nice neighborhood, it
would be hard to over improve something," says Jay Josephs, a certified
appraiser for 23 years and the president of the
Josephs Appraisal Group
in Phoenix. But if you, say, install a $20,000 pool behind a $60,000
house, "you might get $5,000 to $8,000 return," Josephs says.
What you should do: "Pay real close attention to the common denominator in a neighborhood," says Sandra Nickel, the owner of
Sandra Nickel Hat Team,
a real-estate agency based in Montgomery, Ala. Talk to a trusted
real-estate agent or an appraiser, and ask for an appraisal without
improvements and another with them. If it doesn't pay off, "it's not a
good value," Nickel says.
2. Inconsistency
The common mistake: Homeowners goof by upgrading inconsistently, which hurts value, says Josephs, who is also a partner at
Value Trend Solutions.
"I have seen completely remodeled kitchens where people have spent
$40,000 or $50,000 on a kitchen, and the rest of the house is untouched —
there are vinyl floors, blue shag carpeting," he says.
What you should do:
"The best way to get the greatest return on your home is to cure the
deficiencies. Find out what's the baseline in your particular
neighborhood — and anything you can do to bring your home up to that
baseline … is probably an investment worth doing," Josephs says. "One of
the things I like to say is, 'Stone floors and vinyl floors should
never be touching.'"
3. Closing off the porch
The common mistake:
Some folks see a front porch as an opportunity for another four-season
room. That's a no-no, Nickel says. "Obviously, the people who want to
live in that neighborhood value being able to interact with their
neighborhood," she says. High fences and enclosed porches prohibit that,
she says. "Do not wall yourself from the community, if community is one
of the assets of your neighborhood."
What you should do:
If you want to create a comfortable, usable space, make the front porch
a screened porch, Nickel says. If you have a larger full porch, perhaps
enclose half of the porch. But be sure to keep most of the porch open
to the outside world. You — and prospective buyers — will be happy you
did.
4. Too much 'you' in your home
The common mistake: Debi Fortin,
a managing broker with Windermere Real Estate-Greenwood in Seattle,
knows a homeowner who's tidy and doesn't cook. So when the woman
remodeled her kitchen, she went spare. She removed cabinets, put the
refrigerator in the garage and added two little dorm-sized fridges in
small niches. It's gorgeous — and nearly useless to everyone but the
original homeowner. A remodel to such her personal taste decreased the
home's value, Fortin says, because everyone expects a working kitchen.
What you should do:
It's fine to add a personal touch to your remodel, but remember that
you likely won't live in your home forever. Remember that your changes
need to speak to a future homeowner. Or be prepared to eat your
additional investment — and possibly more.
5. Screwing up the floor plan
The common mistake:
Too many people aren't careful when they add square footage to a home,
agents and appraisers say. "Adding a bedroom where you've got to walk
through the laundry room to get there — most appraisers would call that
'functional obsolescence,'" Josephs says. Another example: adding a
bedroom on the east side of the house when the bathrooms are on the west
side of the house. "Those are additions that are probably not going to
bring you a return on the investment that you're going to be satisfied
with."
What you should do: "Keep in mind the
functional integrity of the floor plan," Josephs says. Better yet, hire
an architect who is trained to think about the design and flow of
spaces.
6. Keeping the above-ground pool
The common mistake: Above-ground pools are pretty much a disaster, says Rodney Lee Camren, a real-estate agent with
Keller Williams Realty Atlanta Intown.
Often, part of the ground has to be excavated to sit them on even
ground; they can be hard to enter and exit; and owners often don't clean
them well or cover them, making them eyesores and havens for
mosquitoes, he says. Most would-be homebuyers view them "as cheap and
usually more of a nuisance than anything," he says. "They're bad. And
they're tacky."
What you should do: If you already have a pool, by all means enjoy it. But get rid of it and rehab the yard completely before you sell.
7. Tackling big projects yourself
The common mistake:
You want to feel useful and you also want to save money. So you tackle
those big projects around the house. But in all likelihood you're not
nearly as good at those DIY projects as you think you are, and it shows,
Camren says. "Too many times a homeowner will go in and say, 'Hey, I
can do this.' Really, you can't," he says. "When you go to sell your
home, a buyer is going to spot sloppy tile."
What you should do: Unless you're pretty gifted, "stop doing the [big] DIY projects," he urges. "Hire a professional."
A
professional will also steer you away from making rookie mistakes such
as putting tiles on countertops that really belong on the floor. (Camren
has seen it.)
8. Overstuffing the remodel
The common mistake:
Oftentimes when homeowners remodel a kitchen or a bathroom, they “put
bigger items in there than there should be," Camren says. For instance,
homeowners will remodel with a giant piece of furniture that includes a
built-in sink and cabinetry that overwhelms the bathroom, he says. The
space ends up feeling cramped, and future homebuyers will pick up on
that.
What you should do: "Really, all you need
is a pedestal sink in the bathroom — slender, with no storage, and with
good clean lines," Camren says. Store most of your bathroom supplies in
the linen closet, he recommends. The result will be a more airy, roomy
space that you and prospective buyers — will like.
9. Getting too trendy
The common mistake: Everybody wants a fashionable home, but too trendy can be a trap.
"Something
that's real hot today that I think is going to be a problem in a few
years? Those skinny tile backsplashes" in kitchens, Nickel says. "It's
gonna be like avocado appliances" were a few years ago, Nickel predicts.
"Ten years ago, garden tubs and separate showers were all the rage,"
she says. "Nobody wants a garden tub anymore; we figured out we don't
get in them." Homeowners are ripping them out to put in a nice standing
shower, she says.
What you should do: "Be very
aware of what's trendy, and avoid it at all costs," Nickel says. Steer
toward looks that are a bit more timeless, she says — so hip doesn't
become dated.
10. Converting the garage
The common mistake:
"I see too many people converting their garages to a living area,"
Josephs says. "The problem with that is that you've created 'functional
obsolescence' because you've removed covered parking." When you sell
your home, would-be buyers will see that the rest of the neighborhood
has parking, while you don't. As a result, you’ll turn off perhaps 75%
of your buyers, Josephs says.
What's more, he says, though a
homeowner might have spent $10,000 to convert a garage into a living
room or a man cave, the appraiser might turn around and say "the
additional $10,000 is lost because of the impact of not having covered
parking."
What you should do: Don't turn the
garage into a living space, Josephs says. If you really want another
place to hang out, consider a well-thought-out addition to the home.
11. Being a permit bandit
The common mistake: "Too many people are adding square footage and not getting permitting from the local authorities," Josephs says.
What's
wrong with sneaking in a little (or not-so-little) home-improvement
project? Well, potentially lots of things: Appraisers and lenders may
not include the value of an addition that was not permitted because they
worry that insurers won't give money in case of an incident, Josephs
says. "Some appraisers might give you full value, and some appraisers
might give you no value."
"I have seen scenarios where the lender says, 'Not only do we
not want to give value for this unpermitted addition, we want you to
reduce the valuation of the home to consider the cost to demolish the addition," he says. "That's a bad investment."
What you should do: Don't be penny wise and pound foolish. Endure the cost and hassle of necessary permits for any work you have done.
12. Holding on to brass door knobs
The common mistake:
"One thing I see a lot is that homes that were built in the 1990s still
have brass hardware," says real-estate agent Kim Baker with
Russ Lyon/Sotheby's International Realty
in Scottsdale, Ariz. "It's very noticeable, if you walk into a home
that has been updated with counters, cabinets and yet they haven't
updated the hardware."
What's wrong with brass? "It's dated; it looks old," Baker says.
What you should do:
"The No. 1 thing I tell people to do is change out your brass
hardware," Baker says. Try fixtures made of chrome, brushed nickel or
oil-rubbed bronze instead, she suggests. If you can't afford to redo
your cabinets, "even changing out the brass will add value."
13. Being colorfast
The common mistake:
Color is a personal issue for homeowners. They paint their walls
everything from deep blue to blood red. Trouble is, some homeowners are
loath to return those walls to a neutral color when it's time to sell
the home. That's a huge mistake, Baker says.
Right now Baker has
two houses for sale, four doors apart. The houses have the same builder
and nearly the same floor plan. But in one house, the homeowner has
painted the doors and some of the walls black and refuses to change
them. "The one that doesn't have the black gets three times as many hits
on the website," she says.
What you should do:
Enjoy your home in whatever hue you wish, but with the understanding
that you'll return it to innocuous colors before you plant that "For
Sale" sign. "I just had someone paint a condo that they have used as an
investment," Baker says. She urged the owner to cover the shiny yellow
paint in an eggshell hue. The result? "I got an offer for her the first
day. And she probably got 10% to 15% more [for the condo] than if she
had not done that."
14. Ignoring flaws
The common mistake:
A lot of folks are like Goldilocks: They think their home is just right
and without flaws. Baker recalls one client to whom she suggested they
do a pre-inspection before putting it up for sale. The seller balked,
offended at the idea that her home might hide problems. When an offer
was brought to her, she had more than $40,000 worth of repairs,
including hail damage and termites, Baker says. "She was out a lot of
money."
What you should do: "Disassociate
yourself from your home," Baker says. "If your home is more than 10
years old, get an inspection done even before you list it so that you're
not surprised by any problems and can deal with them."
According to Freddie Mac, 30-year fixed-rate loans
were as low as 3.45 percent in December 2012 and rose to 4.49 in
September 2013. Barry Habib, co-owner and chief market strategist for
Residential Finance Corp., said mortgage rates are likely to stay low
and perhaps even drop between now and March 2014.
Yun
said a continuing surprise is that about one-third of all home
purchases were made with cash, a market share that has been consistent
for the past three years. While some of these cash buyers are from
overseas and some are institutional investors, others are “mom and pop”
investors who have had trouble getting financing. “Even some
owner-occupant buyers are cash buyers because of the excessively tight
underwriting standards for loans,” Yun said. “Some people are getting
help from relatives to buy, and then they plan to take out a home equity
loan later to repay them.”
“Right
now we’re seeing replenishment of renters who want to buy homes,” Habib
said. “At the peak in 2002, nearly 70 percent of people owned homes and
30 percent were renters; now 65 percent of people are homeowners and 35
percent rent. Not only are rents rising faster than home prices in many
markets, but there’s pent-up demand from people who don’t want to live
at home with their parents and who want to buy a home.”
