People often talk to me about their desire to renovate their home after they saw what their neighbors did, or went to an open house down the street where they were impressed by somebody’s awesome remodeling.
Sometimes it’s worth undertaking projects with a low return on investment, such as adding a new bathroom, if it improves your comfort and your home’s livability. But many cosmetic changes (say, swapping out a perfectly good set of kitchen cabinetry for another) likely won’t have a high return on investment if you sell the home. I’ve been on so many broker tours where I am amazed at the choice of quirky personal tastes. This house in Oakland below was in a great location with a view of the Bay, ideal layout and open concept living. However, even though the updates were extremely high quality, the personal choices such as the kitchen hood, sink and other finishes throughout dissuaded many buyers. This home end it up staying on the market 2 weeks more than our usual 14 days. I can bet that the sold price was less than what the sellers were hoping for with all the expensive upgrades.
Renovations often cost more than originally planned, so you should wait until you have 15 to 20 percent more than the in the bank before taking the plunge. Once the project gets underway, there’s no telling what money-draining horrors may be lurking behind the walls, from unforeseen pest damage to building code violations.
Resale value is less important in your “forever” home, but if you’re in a starter home or somewhere in the middle, it’s a good idea to consider what future buyers will want. Quirky or excessive customization—adding brightly colored tiles or vintage appliances, for example—may decrease the value of your home.