A Primer on Which Home Updates Are Best for Your Property Value With Real Estate Expert Devon Thorsby | Wealth of Knowledge Podcast

U.S. News real estate editor Devon Thorsby joins the show to talk about which home renovations recoup the most value, which will hurt your home when you look to sell and what small tweaks can help your home sell quickly when you put it on the market.TranscriptAntonio Barbera: Hello and welcome to Wealth of Knowledge. I’m your host Antonio Barbera, and today on the show we’ll be reviewing all sorts of different exterior and interior home updates and whether they’re worth it to increase the property value of your home. I’m joined by U.S. News real estate editor Devon Thorsby. Devon, thanks for joining me as we tackle home updates. Devon Thorsby: Yeah, thank you for having me on. Antonio: So I’ve been trying to plan the right time to have this episode. I’ve had it in the schedule for multiple months and then it seems, you know, we’re middle of the winter here getting close to spring when homeowners start thinking about making updates for the new season and for the new year. So property owners are always looking to increase the value of their home. But I think a lot of times consumers mistake things that they want for things that they think homebuyers will eventually want. So I suppose the first split we need to address here is whether you’re making an improvement for yourself and the home you want to live in for a long time, or whether you’re viewing the update as something that will appeal to a buyer. Devon: Absolutely. You can make changes to your home that make it more attractive to buyers and hopefully have them willing to pay more to make it their own. But you also can’t expect to recoup every penny you paid for the improvement. Some home renovation shows provide these misleading numbers at the end of episodes that show how by spending $75,000 renovating your whole house, you somehow added $115,000 to the value. That’s completely made up. It’s not a thing. There are updates that can add monetary value or something like help it go off the market faster, but it’s not going to add more than what you spent. It will be less. And then if you’re improving for your own personal benefit to live with and enjoy for years, that’s great. Customize away. But you have to remember that from now, when you make the improvement, to years down the road, when you decide to sell your home, that improvement did not add value to your home, especially when other houses in the neighborhood don’t have it. It’s not something that people are necessarily looking for. Antonio: I think a really good example of this is when people have the thought of adding a pool to their house. You may want one for your family, but it’s a gigantic expense that ends up being or can be an obstacle when trying to sell your home. Would you agree with that? Devon: Absolutely. Backyard swimming pools are tough for real estate. If you’re in a hot state, like Florida or Arizona, there are plenty of neighborhoods where every backyard has a pool. And so it’s easier to tie that water feature into home value. But if you live just about anywhere else in the U.S., anywhere that gets a real winter, that pool is a liability. If you don’t winterize your pool properly, you get cracks and damage and pipes can freeze. So in addition to the cost of water and maintenance during those hot months, you’re also annually having your pool repaired. And homebuyers know that when they see a pool in the backyard, they know that additional costs and they’re not necessarily going to add dollars to their offer because their annual expenses to own this home just went up. I hail from a cold state and even though I don’t live there anymore, I personally consider a pool to be a deal-breaker on a house. The house could be perfect, everything I’ve ever wanted and there’s a pool in the backyard? No way. But, of course that’s just me. So if you’ve been dreaming of being the house in the neighborhood with a pool, and your kids have great time during the summer every day, go for it. But your house isn’t going to be worth $30,000 more because you have that pool. Antonio: You know, Devon’s come on the show a few times now, and we’re three minutes in, and I thought you were going to just already start waxing poetic about the state that you’re from. But, very professionally, didn’t include where it is. Devon: I’m from Michigan, by the way, if anyone was curious.Antonio: Ah, so there we go. Alright, so let’s talk about then some other home improvements that really should only be done if you plan on staying in your home for a long time, like you talk about the pool, if you love it and you’re going stay there for a long time. The first thing I think we have to explain, too, is what is a long time by real estate standards, by living in a house? Are we talking about five years, 10 years? You know, longer than that? And then what are some other home improvements that you may think are better for your property in a resale situation, but really aren’t?Devon: Yeah. In terms of what is a long time, it all really depends on the size of the project that you’re going for. If it is a major kitchen renovation that becomes a luxurious, upscale chef’s size refrigerator and multiple ovens, it’s going to cost a lot of money. So you may want to consider that, “I’m going to be living here for the next 15 years.” If it’s something like expanding your bathroom a little bit so that the shower isn’t quite as small as it once was, it could be a costly renovation, but that also could be something that adds a little bit more value and is good for a couple of years, as opposed to something like 10 or 15, before you can consider it something that’s worthy of your own customization versus how much value it adds. And we also have to look at the way home value is determined. How appraisers think about it is they compare your house to similar homes nearby, particularly those that have sold recently. If every house in your neighborhood has three bedrooms or less homebuyers shopping around in that neighborhood likely don’t need a fourth bedroom. So making a fourth bedroom addition won’t necessarily add that much value, but maybe it might make your life easier because you have three kids and now everyone has their own room. Other things I would consider: a Jacuzzi tub anywhere but the bathroom and a hot tub anywhere but outside – probably a great customization for you. Not good for your home value. I’ve seen photos of a tub in the middle of the bedroom and it just looks creepy. So people aren’t going to want to come see your house and you might prefer to have your hot tub undercover like in the garage or something. And while that might be fine with you, no one else wants a hot tub in their garage. And not only will they not add value to that addition there, but they will ask you to remove the hot tub when you move out. But there are still a lot of customizations that can be fairly simply changed before you put your house on the market. You can turn a room into your own personal yoga studio or specialize it for another hobby, but before you put it on the market, put the effort in to neutralize it, make it possible to look like a home office or a second living room. Even little things like wallpaper, which is trendy right now in interior design and has made a comeback from mid-century when it kind of got out of control. But homebuyers still see it as a labor-intensive project to remove, and they also see it as a very personal style decision. So you should get rid of any wallpaper before you put your house on the market as well.Questions and responses have been edited for clarity. Transcript shows only a selection of the whole episode.

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