I am sure you have seen those articles in magazines that say stuff like “Get back 89% of the cost when you update your bathroom.” It’s not that I think they make that stuff up. It’s not that I doubt that really happens. The problem I have with it is that it makes people believe that the money they spend now is guaranteed to make them money in the future.
Here are the factors that are often overlooked when people think about cost vs. value: Age, condition, style, design and quality are a few. Why does all this matter? The reality about value is that your improvements must be both desireable and have enough life left in it for the new owner. Everything has an economic lifespan. With updates, you also have style to consider. New hardwood flooring that most people think is ugly may not add any value. High end maple cabinets that are now 10 years old (and show it) may not add any value either. Think I am crazy? Ever see a high end remodeled bath from the 80’s with a blue toilet and gold fixtures? Somebody spend a lot of money for that during the 10 minutes it was in style. Had they sold it THEN, it would have been worth it all. The same goes for pickled cabinets. I have them in my house and I am sure they were an upgrade! Now they hurt the value of a house.
Do you have to update in this market to sell? No, not at all. But you aren’t going to get any where near the “Potential Value” for your house. Believe it or not, that isn’t a bad thing sometimes. I have a great example. I sold a house for a lady a few months back. She built the house new 10 years ago. She had not put one penny into any updates. All the appliances were original, the carpet was worn out, the water heater was original…………you get the picture. We sold it for about 94% of similar houses in the area that had been updated some. Think about this! Who really came out ahead here. The buyer needed to put in all new flooring and paint everything and even then they still have all the original appliances and mechanical systems. The seller “Lost” that 6% of value (about $15,000) but NEVER, EVER spent a penny over 10 years. I think she is the winner here. She got use of all the stuff that typically gets updated and passed them on to the buyer when they were of no value (depreciated). Most of us would have spent more than $15,000 for updates over 10 years and wouldn’t have come out as good as she did!
That story leads me to the most cost effective update: Paint! I really think that if my seller had painted the whole house we could have gotten a lot more money for it. Most painters charge $1/square foot of floor space. To paint a 2400 a square foot house would be about $2400. If you do it yourself, it is even cheaper. Paint is the biggest bang for your buck when it comes time to sell.
I will skip the stuff about updates that everybody has seen on HGTV. I assume everybody knows that you shouldn’t over/under-improve for your neighborhood.
The bottom line is that yes you can get most of your investment back when you sell BUT it has got to still be in style and still look pretty new.