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Think Twice About that Beyonce-Inspired Bathroom: Home Renovations that Hurt Your Property’s Value

home renovationsEvery dog has its day, like the old saying goes, but for singer David Cook and his dog, they’ve seen better ones. When the American Idol idol was dropped by his record label last year, Cook pulled up stakes at his Los Angeles/Beachwood Canyon home, heading back to greener pastures in his home state of Missouri.

Cook’s 3-bedroom, 3-bath, 3,071-square-foot abode — with the sweet view of the Hollywood sign — should have demanded top dollar. But to add insult to the injury of leaving Tinseltown, Cook was unable to sell the palatial pad for his $1.495 million asking price. Instead, he settled on a lesser, $1.399 million deal. What was the reason?

According to Realtor.com, the house boasted an open floor plan, wood flooring, skylights, a master suite with its own private floor, and a private recording studio. Top dollar digs, for sure — Zillow.com even estimated Cook’s monthly mortgage loan payment at $4,863 (assuming 20% down on a 30-year FRM).

Some speculate that the lackluster sale was Cook’s overzealous over-customizing for his dog that dwindled interest and plummeted the price. The spacious yard reserved for his dog was larger than three of most people’s real backyards, combined. Cook isn’t alone in the custom homes department — enthusiast pilot John Travolta’s got an airplane hangar attached to his home, and singer Beyonce sports a sparkle-encrusted bathtub.

The truth is, over-customizing lowers a home’s resale value. What one homeowner considers treasure is another’s trash. It doesn’t matter how affordable the carefully customized home renovations are; if they’re too difficult to maintain, don’t fit into buyers’ lifestyles, or are just plain tacky, making your home  too “niche” can discourage potential buyers.

Before you think about digging that 100-yard-long swimming pool flanked by gold columns, take a look at this list before going overboard on the over-customizing.

Image: Credit Sesame

Custom Home Designs: When Too Much Really is Too Much

These “home improvements” are bona fide value killers and will not impress a real estate agent or anyone you hope to sell your home to.

1. Over-customized/generally tacky exteriors

home renovation costsThere are exceptions, like turning your house into a billboard to help save it from foreclosure. Any other reason to paint your house neon green is out of character with your community and is just asking for its value knocked down a few hundred thousand dollars. “This kind of house will be extremely difficult to sell because potential home buyers won’t be willing to spend the time and money to redecorate it to their liking,” says Credit Sesame.

If you must go against the neighborhood grain, stay with safer, neutral paint colors and tasteful add-ons that hold more general appeal to buyers.

2. Wall-to-wall carpeting

custom homesIn the 1970s, a house full of lush, cut-pile shag carpeting may have worked wonders for a home’s value and appeal. In 2013, it can bring your home’s resale value down. Why? According to both Credit Sesame and Jean Folger of Investopedia, carpeting is expensive to purchase, install and maintain. (If you have kids, think of all the spilled messes to clean; for pets, all the trapped allergens.) Plus, like your house’s paint job, the design and color of your interior carpeting makes a big difference in how appealing, and valuable, your home is (or isn’t).

Carpeting is not a floor’s enemy, mind you — so if you do prefer it, decorate with a mix of carpet, hardwood floors and tiles. Area rugs also work well for the budget conscious.

3. Niche rooms and big-ticket upgrades

custom built homesWe’ve seen them in plenty of houses before: that state-of-the-art, high-tech home theater. In the next room, the most antiquated kitchen or bathroom this side of the 19th century. Custom home designs, by and large, work best when they’re carried out altogether, or not at all. “High-quality upgrades generally increase the value of high-end homes,” notes Folger, “but not necessarily mid-range houses, where the upgrade may be inconsistent with the rest of the home.”

And what guy wouldn’t like to have his own man cave? If it means dropping the value of your home, you might want to reconsider. Here’s the consumer rationale:

  • Invest money into a high-end add-on, like a wine cellar, basketball court or rock climbing room.
  • Watch your home’s value grow from said investment.

Expensive add-ons don’t class up a middle-class home and give it little to no new value. “Even if you upgrade a house to a value of $400,000 in a $250,000 neighborhood,” says Credit Sesame, “potential home buyers probably will not be willing to pay substantially more than the most expensive house in the neighborhood. The house will continue to seem overpriced, even if it appears to be more desirable than other homes in the area.”

custom home designs

4. Swimming pools

Location makes a difference with a pool. What demands value in California, Arizona or Florida calls for less in Montana, for example. Swimming pools may not seem like a big home value liability, but they are: home renovation costs to install an in-ground pool is $10,000, says Credit Sesame; maintenance costs average $1,500 annually. They can also be a safety hazard for homeowners with small children: “Many potential home buyers view swimming pools as dangerous, expensive to maintain and a lawsuit waiting to happen,” says Investopedia.

5. “Invisible” renovations

“Invisible improvements are those costly projects that you know make your house a better place to live in, but that nobody else would notice — or likely care about,” Folger explains.

Necessities like new central heating, air conditioning, or plumbing may seem like a good idea — or even be mandatory — but they don’t mean squat when it comes time to sell your home. The unfortunate reason is that home shoppers don’t consider these items luxuries, or even amenities — they’re just regular pieces of a home they won’t consider paying extra cash for. “It may be better,” notes Investopedia, “to think of these improvements in terms of regular maintenance, and not an investment in your home’s value.”

When Home Improvements Go Right

home improvements

According to Zillow, homes in the Pacific U.S. — Alaska, Hawaii, California, Oregon and Washington — have the highest average cost-value ratio in the U.S., at 71.3%, because the high costs to remodel on the West Coast is balanced out by high resale values.

In findings from the National Association of Realtors and Remodeling, Zillow reports that seven of the top 10 most cost-effective home renovations are exterior home improvements. Fiber-cement siding replacement, the report showed, holds the most return value, with 78% of costs recovered at resale. Steel entry door replacement — the cheapest on the list at $1,200 — retains 73% of its value, and low-end kitchen remodels, at $20,000, hold over 72% of their value at home resale, too.

So if splurging on custom built homes is a bit out of your wallet’s price league, don’t go to the other extreme and pay for renovations that lose your house money when it comes time to sell. You may be stuck with them  and the mortgage forever, fulfilling another old adage:

“Be careful what over-customized add-ons you wish for; you might just get them.”

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