As housing prices continue to soar, many prospective buyers are struggling to find a home. On the other hand, many homeowners are seeing incredible gains in equity. Those who fall into the latter category may be tempted to build on their newfound equity with renovations that boost home value even more. Indeed, renovations are usually a reliable way to improve a home’s value, but you may be surprised to learn that some projects have the potential to hurt your equity rather than help it. The prompts the question — what projects add the most value to a home, and what projects can decrease home value?
Increase: Renovating Your Bathroom
One of the most reliable renovations for a return on investment is an upgrade to your bathroom. While you may be tempted to replace every fixture and repaint every wall, though, this isn’t necessarily the best approach. If you want to optimize your investment, you can do so by making strategic updates that are affordable and easy. Examples include installing new light fixtures, regrouting tile, or adding a new medicine cabinet. If your bathroom is older and needs further renovations, you should choose updates that maintain a neutral appearance. This will help maximize the appeal to prospective buyers and thus the overall equity.
Decrease: Turning Bedroom into Walk-In Closet
Though it isn’t common, it’s not unheard of to turn an extra bedroom into a walk-in closet. If your home has two adjacent bedrooms, and one of them isn’t in use, it may seem tempting to covert it — but it won’t do any favors for the value of your home. On the contrary, it will likely cause your home’s value to decrease substantially. The vast majority of homebuyers would prefer an additional bedroom over additional closet space, so this is one renovation to skip.
Increase: Remodeling the Kitchen
It’s been said that the kitchen is the heart of a home. It’s unsurprising, then, that renovations can offer impressive returns on investment. It’s best to start with minor improvements like a new faucet, updated cabinet hardware, and newer light fixtures. If your kitchen happens to have older appliances, though, one of the best improvements you can make is upgrading them. Homebuyers are often impressed by stainless steel ovens and refrigerators.
Decrease: Adding a Pool to Backyard
Who would’ve guessed that a pool can actually decrease the value of your home? Indeed, it can be a turnoff for some buyers due to the additional costs it can incur. There are countless pool-related accidents every year, and home insurance doesn’t always cover such incidents. In addition to a home insurance premium, you may have to pay for additional pool coverage, and these expenses may be enough to dissuade some buyers.
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