banktime.com

There’s a tremendous tendency among homeowners to think that every penny you sink into your home is an improvement that will reap you corresponding equity if and when it ever comes time to sell the property. Too bad that things don’t at all actually work that way. Statistics show that, for every thousand dollars that homeowners spend making their homes “better,” they can only expect to recoup around six hundred dollars. And that’s in best case scenarios. In fact, a recent report from the LA Times suggests that certain “home improvements” could actually prove to be more like liabilities when prospective buyers start coming through the door.

That’s not even talking about investments that actually turn out to make you very little money in the end, two examples of which are given as swimming pools and bedrooms converted into home offices. Swimming pools cost a lot of money to build, and they tend to recoup barely half of the cost in corresponding home value, since so many buyers don’t want the work and expense of dealing with such a “luxury.” For example, my husband and I actually told our realtor to avoid houses with swimming pools, because we have two very young children. Home office renovations are also risky business, since many prospective future buyers would rather just have an extra bedroom. Other pricy home repairs that are cited as tough to recoup include granite countertops, vast and expensive landscaping projects, family room additions, and upgrading appliances that still work. But every so often, realtor word-of-mouth reveals certain properties that actually end up almost impossible to sell due to expensive choices made by the previous homeowners.

Take, for instance, the tale of a Salt Lake City homeowner whose home really was his castle – literally. The homeowner had reportedly invested thousands of dollars to add turrets, concrete gargoyles, and a drawbridge to the house – along with a moat dug out front. Unfortunately, the job was done poorly, and the multi-level roof was leaking badly enough that mushrooms were growing down through the ceiling on the first floor, and up through the carpet on the second floor. The house sold, but for a fraction of what it was initially listed for. After all, who wants to be perpetually telling visitors that their home can be recognized by the flag tower on the roof? (That’s to say nothing of the growing of fungus inside your home. Yuck!)

That’s to say nothing of the Californian homeowner of a house and attached half-acre empty lot, who was trying to sell the two parcels of land separately. The seller scored a buyer, only to have the deal collapse at the last possible instant when it was found that the seller had done some do-it-yourself plumbing and routed a waste drainage line from the house straight into the water management company’s storm drain. The realtor telling the story bemoaned the fact that “fifty-plus days of negotiations” went to pot in moments when the illicit pipe job was found by the appraiser. The house remains unsold, because nobody in their right mind wants to take on that burden! That leads to the second category of distressed real estate – those homes with over-ambitious sellers who took on renovation projects far beyond the scope of their own talents.

Under this category fall those homeowners who started to build additions and never finished them. The Times story told of a home in Nashville with an entire brick back wall removed and covered with plastic as the sad remnants of a husband who abandoned his wife and kids… and the addition he had started. An unfinished addition is a huge liability when it comes to trying to sell a house, because not everyone has the time, money, and energy needed to realize the project. You will never get any credit for the materials you put into the project, rather, you can expect to have to take a significant chunk off the selling price to accommodate a potential buyer who will want some room in the budget to tackle their new albatross. And that’s assuming that you can find a buyer at all!

Of course, sometimes finished projects make so little sense that they aren’t much better than incomplete additions. In Los Angeles, the story reported, the city’s vast amount of “creative types” tend to love to convert extra bedrooms in their homes into recording studios and/or screening rooms. These conversions are iffy, but not too bad – recording studios are easily converted back into their rightful status as bedrooms, and in such an area, sellers might just be lucky enough to snag a similarly-minded buyer. On the other hand, grumbled one fine-estate realtor in the Encino area, there was a certain three bedroom home with a recording studio conversion and the smallest, middle bedroom turned into an epic walk-in closet for the master bedroom. Well, make that the SINGLE bedroom. There simply was almost no market for single-bedroom homes in La La Land, as there probably would not be anywhere. The house, again, probably had to be sold at a loss, although the story did not spell out that homeowner’s particular fate.

Another story, from Nashville, tells of a homeowner who felt that they could benefit from more storage space. Interestingly enough, the realty company in question had helped sell the house in 2005 as a four bedroom, two bathroom home. Imagine their surprise when they again received the home for listing… with one less bathroom on the specs. The homeowner had decided to turn the downstairs bathroom into a storage closet. This person wasn’t content to box in the sink and toilet and to fill the shower with unused items, however – oh, no. They had decided to remove every single fixture, leaving a space that was essentially worthless. The seller bragged that his home would be worth much more money with all the extra storage space. His realtor had to gently break it to him that most likely, the opposite was true. After all, how many people with a two-story home fancy the thought of having to run upstairs every time they need to answer the call of nature?

Then there are the homes that look like the abode of Frankenstein, with extra parts just added willy-nilly all over the place. A tale was relayed from Athens, Georgia, where realtors were baffled by a farmhouse that had been extended with a new kitchen, a few new bedrooms, and new bathrooms. The only problem? The new additions were added with zero thought for the logic of layout, with multiple levels of elevation throughout the house, and the living room so cluttered with doors to other rooms that it was practically impossible to place any furniture in it at all. Every room was said to have its own crawlspace, and the roof was reported to be a complete monstrosity. If your home looks like a miniature version of the Winchester Mystery House, then expect potential buyers to be at least a little dismayed.

Look, nobody’s saying that you shouldn’t have the home of your dreams. Style is subjective, and what’s beautiful to one person could be anathema to another. I remember, as a small child, looking at a home with my parents when we were in the process of relocating to a new state. The home in question, which was located on a gorgeous beachfront lot, was priced strangely low for the neighborhood. A quick glance inside revealed why. The home sported four bedrooms, all of which were arranged in a line down a hallway, like a hotel. The rooms each had a step-down sitting room-esque area separated by a sliding glass door. There was buttercup-yellow fixtures in the kitchen, bright pink tile in the bathroom, and the aforementioned bedrooms were painted electric colors of yellow and orange. There were numerous structural issues with the house, including a rotting roof and a living room floor that creaked dangerously enough when walked upon that even us kids worried about falling through. The home’s owners undoubtedly had arranged the home’s décor (although undoubtedly not its level of disrepair) to their satisfaction, but it was repulsive to look at. Use your common sense when you are undertaking serious changes to your home. Is the renovation going to add space or amenities in logical places that will preserve the natural flow and footpaths of your home? Are your changes very eclectic? This isn’t as subjective an assessment as you might think… look out the front door! Do any of your neighbors have a moat in the front yard? How about your whole neighborhood? Is the answer no? Give some thought to what that might mean.

If you make common sense choices when deciding what to do with your home, it’s unlikely that you will be hit with a major case of the buyer freak-outs when you start getting people through your house. Experts estimate that paint is one of the best investments for your money. Keep your home clean, paint the interior walls neutral colors, and maybe through on a pan of break-and-bake cookies before your open house. Those things are much more likely to impress buyers than a bathroom-turned-closet.