Recently, I found an article on Trulia that, on the surface, seemed like a straightforward fluff piece. When I read the article, I found there is some value in the authors comments. While I don't agree with everything as written, it's still very informative.
The one point that I think may have been lost in the article is value versus sale-ability. I cannot count the number of times a homeowner has said to me "We added ______, so that increased the value of our home by $$$." While this statement is sometimes true, more often it is incorrect.
How could that be? You have invested money into your home, so that should surely add to the value. 2 + 2 = 4, right? Not always. The two forces at work are the perceived standard and saleability. Understanding those two forces is critical BEFORE you invest money in your home.
Perceived Standard
When you drive into a neighborhood to view a home, you automatically have expectations of what you will or will not see. In a middle class neighborhood, you don't expect to find the same features as an upper class or lower class neighborhood. You automatically know from personal experiences that there are differences and you at least have an idea of what those differences may be.
If your home is lacking features or the quality of features that potential buyers expect in your area, then spending money to meet that level of expectation does not add value to your home. You are simply meeting the perceived standard of the area. Unfortunately, if you do not make those improvements, the value of your home is likely less than the average because of the deficiency.
Saleability
Another force in home selling that works in tandem with price and features is saleability. Quite simply this is the desire created by your home for potential buyers. If you add features or make changes, you invariably affect the saleability of your home. Whether or not that affect is positive or negative is the question.
One example that frequently comes up is a pool. Should you add a pool or not? What will happen when you sell the home? In the case of a pool, saleability is affected both negatively and positively.
By adding the pool, you have immediately removed a large portion of potential buyers who dislike or are inexperienced with pools. Unless the pool can be removed and the impact of the removal repaired, those buyers will walk away.
The flip side of the coin is for buyers who want a pool or who have wished for a pool, you have increased their desire in your home. They money they would have spent to install a pool is no longer relevant.
Conclusion
While a pool is an extreme example, the same theory holds true for every other potential change you can make to your home. Be selective and smart about making changes and you can come out ahead rather than disappointed.
Your best course of action is to consult with us before spending the money. We can guide you to make the best decisions before they can potentially harm you. Regardless of if you are selling your home now or ten years from now, why wouldn't you call us to make certain that you are realizing the most return for your investment?
Now on to the article from Trulia!
Warmest regards,
Dan
