Will this upgrade increase my home's resale value?

I have read in Remodeling Magazine and other publications that a properly maintained and clean home is preferred over one that is upgraded, based on surveys.

It seems easy to determine from anecdotal evidence that upkeep may be more important to buyers than upgrades.  This isn't necessarily true for all buyers, of course, and all buyers want to buy a clean house with few necessary repairs. But for most of them, the decision of which is more important depends on what kinds of upgrades we're talking about and how far in disrepair the home may be.

If you are looking to remodel or upgrade your home and you plan on selling within about five years, you should take several factors under consideration before you start your project.

High dollar, high end, highly personalized additions or remodels bring the lowest resale return on investment, and in some instances the buyer might even look at them and calculate the cost of ripping them out and reduce the offer even further.

So spend your money on those special projects only if you will be staying in the home for a long enough time that you can feel you got your money's worth in enjoyment.

I take buyers out home-shopping all the time, and while some buyers ooh and ahh over fancy over-the-top master suites or cabanas or lush water features, they don't really want to pay for them - especially if the improvements are significantly above the standards of that neighborhood.  And since neighborhood comps rule when the house is appraised, the buyer most likely will not get a purchase loan sufficient to cover such luxuries when they are uncommon for the area.

Buyer priorities change over time and from area to area, but here are a few projects you should probably consider ONLY for your own pleasure while you live in your home, and for which you should not expect to recover the cost.  My own experiences in the Sacramento area coincide pretty much with the results that Remodel Magazine reports.

Probably the worst return on investment will be gained from a high-tech office with lots of built-ins and special wiring.  It might look beautiful, but most people are operating with wireless devices and all of that expensive electronic wiring would be better ripped out.  Any upgrades to make your office should be made so that the room can be easily converted back to a bedroom, since bedrooms have more value to most buyers (and appraisers) than a one-purpose room that cannot be used as a bedroom without significant remodeling expense for a buyer.

When selling, if you do have an office, call it a den or study.  A multipurpose room is perceived as good, and something that reminds people of work can be bad.  Depending on how elaborate your office is, your return on investment will be no greater than 40-45% at the very most.  My experience, however, shows that most folks will want to rip it all out (no matter how pretty it is), and they factor in that added expense before determining the property's worth to them.

Another remodeling mistake when it comes to resale value is the super master suites we sometimes see that are made by combining two bedrooms in a neighborhood where such masters are uncommon or nonexistent.  By doing this you have lost a bedroom, and converted the valuable 4 bedroom home (for example) into a three bedroom.

Probably the most common size home in our area has three bedrooms, and if I am doing my search for a home for buyer clients, I will search for a home in their price range, in their preferred area, with the number of bedrooms they need.  If I'm looking at a list of 3 bedroom homes in a specific neighborhood and one is priced very differently from the others, it might not even fall into my search parameters. 

So your home will have to be priced not much differently from other homes with the same number of bedrooms, even though one of your bedrooms is super-sized.  I'm also told by appraisers that the number of bedrooms is often more valuable than the fanciness of the rooms.

Remember that adding a bathroom - even if it's not luxurious - will probably cost $20-40,000, and it may be a good idea to ask a realtor whether that would be a good investment on your home in your area.

A fancy tricked-out garage might bring out the little boy in many men, and everyone can appreciate how great it looks, but there is a very limited market for such a garage, and you are unlikely to recoup that expense.

It is common for sellers to be very proud of the work they have done on their homes, and they feel it has made the home much more valuable.  It can be a touchy subject for a realtor to explain to this proud seller that he had decreased, rather than increased, the market value of s home.  His only consolation is the happiness and enjoyment he has received while he has lived with it.

So please stop and think before making major improvements to your home: Will this upgrade increase my home's resale value?  When in doubt, consult a realtor who can give you some guidance.

And please don't misunderstand this advice.  Some upgrades are very helpful for resale.  Upgrading your kitchen with granite or other modern surfaces, replacing older appliances, and perhaps even replacing linoleum floors with tile or wood will often bring great returns, as will upgrades in existing bathrooms.  Just remember not to make your home the most expsensive one on the block - it will likely not appraise for what you have invested.

Of course if you plan to live in the home for 5-10 years and the upgrades will make you happy, go ahead and enjoy yourself. Just don't expect to recover your investment when you sell in the future.


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Thinking of selling your home?  Remember it costs you nothing for me to come out and discuss your home, the market in your area, and give you a market analysis and presentation so that you will know what you can expect to get for your home.

Call for appointment:  (916) 705-8951

Also Remember,
I can help you to tour any home for sale in Sacramento County and the surrounding areas, no matter what firm has it listed, and I can help you with your purchase if you find the perfect home for you.

Just give me a call at (916) 705-8951

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Susan Neal
Broker / Realtor

Susan Neal Fine Properties
Century 21 Noel David Realty
Fair Oaks, California

Full time real estate services in Fair Oaks CA, with friendly professionalism, 30+ years experience. 
I work hard to give my buyer or seller a low-stress transaction.

"Happy clients make me happy."

For all your real estate needs or questions, call me at (916)705-8951 or visit my website at www.SusanNealFineProperties.com.    

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