Ask the Expert: 5 Surprising Things that May Lower Your Home Value

Surprisingly, not all home improvement will add value to your home. This is certainly not to discourage you from making home improvements but to educate you on some of the things that may not add value or may even lower the value of your home if you are planning on selling or refinancing it.

1.Swimming Pool

A beautiful pool may be your dream and in some markets, it may add to the value of your home. However, in many markets the addition of a pool will limit the number of buyers to those that would want a pool. A pool requires additional maintenance and liability.  If you paid $30,000 for a swimming pool, but in your neighborhood similar homes with a pool are only selling for $10,000 more than those without a pool, then you have actually lost $20,000.  If you are considering adding a pool, it would be wise to consult with a real estate professional such as a real estate appraiser or Realtor in your market to find out the value contribution of a pool. Then weigh your desire to have a pool with the cost, maintenance, and value added. 

2. Additional Square Footage

Adding an additional bedroom or game room may be what you need or desire for your family and can add value to a home, but there are some things that you need to be aware of when adding on to your home. You can lose value with an addition if the addition has what we term as "functional obsolescence." If you add an extra bedroom that is accessed from the exterior or you have to walk through a bedroom to get to another bedroom, this would be functional obsolescence. This would be a design flaw in the functional utility of the room and the market typically has a negative reaction. So, make sure that your addition is constructed similar to the rest of your home and that the design and flow are typical for your market. You can also lose value if you add so much square footage to your home that it would then be considered overbuilt for your neighborhood. Every neighborhood has a price ceiling, and if you make your home so much larger than the other homes in your neighborhood, you will not get the same price per square foot value.

3. Garage Conversion

Converting a garage is a common way that homeowners like to add living area to their homes. If you decide to convert your garage, you will need to be mindful of the items just discussed when adding square footage.  Make sure that the quality of construction is the same and that the flow, design, and utility are typical of the market. If the conversion is not the same quality of construction and it is not heated and cooled, it won't be counted as living area based on how appraisers measure.  Also be mindful of your market and neighborhood.  Are garage conversions legally permitted? If they make sure that you get a permit. Are garage conversions typical of your neighborhood?  Is your home the only home in the neighborhood without a garage? If so, this may negatively impact your value.

4. Themed Bedrooms

It has become popular to decorate your child's rooms with themes. You may want to paint a pink princess room with a Cinderella mural or a Peter Pan room complete with a large mural of Neverland, but know that you will limit the number of buyers that would want rooms with those designs when you go to sell. This can be corrected by repainting, just know that too much specialization and customization of themed decor will not increase the value of your home.

5. Landscaping

Curb appeal is certainly important and landscaping is a great way to enhance the curb appeal of a property. Where you can lose value is by over improving. We have seen where homeowners have spent tens of thousands of dollars on landscaping, but the market typically doesn't have a very large reaction to homes with typical landscaping over those with extensive, expensive landscaping. Just look at your neighborhood. You would not want to remove all of your green grass and have a complete rock garden. You do not want your landscaping to be atypical for the neighborhood. Too much ornamentation and yard art, such as large permanent statues, may also negatively impact your value if they are too unique and not typical for your neighborhood. 

The most important thing to remember when improving your home is knowing your market area. In appraising, the value is determined by the reaction in the marketplace. Make sure that your home improvements will add value to your home.  Look at your neighborhood, consult a real estate professional, and determine if the cost of the home improvement will be more than any added value. 

Shannon Slater is a Certified Residential Real Estate Appraiser for the DW Slater Company. The DW Slater Company provides residential and commercial real estate appraisals in the Dallas/Fort Worth Metroplex and rural North Texas.  Shannon has a real estate appraisal blog at DW Slater Company Appraisal Blog.





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