Home Improvements to Avoid When Selling Your House

Watch out for these remodeling mistakes if you want an edge over other sellers in an iffy market. While some fixes can gain you money upon resale, these 'seven deadly sins' may cost you twice.
By: Amy Hoak: The Wall Street Journal Online
The in-ground swimming pool at a house in rural North Carolina is a huge asset in the social lives of Greg Gabbard's college-age children. But Mr. Gabbard sees the pool as one of the biggest home-investment mistakes he has ever made.

"Assuming I can sell this place, I will never have another pool," says the 43-year-old Internet-security contractor.

He blames the pool - and the house's high-maintenance cedar siding - for buyers' reluctance to purchase the four-bedroom home during its five-month stint on the market last summer. While nearby Charlotte, N.C., enjoyed a healthy real-estate market, Mr. Gabbard got a dozen lookers and no takers for the house.

His assumption is probably correct, says Holly Slaughter, brand manager for RealEstate.com, a Web site that provides information to home buyers and sellers. A pool often deters buyers, especially in areas with a number of community swimming holes, she says.

Homeowners hear a lot about improvements that might add value to houses. But less attention is paid to what to avoid.

Steer clear of renovations that will cost you money at resale time. Avoid these seven deadly sins of remodeling if you want an edge over other home sellers in an iffy market.

1. Overexpanding

Trying to keep up with the Joneses is fine, but don't keep outdoing neighbors with additions unless you plan to stay put a long time.

A home that becomes conspicuously larger - and more expensive - than those around it will risk becoming hard to sell, Mrs. Slaughter says.

Additions tend not to return their entire investment, according to Tom Stevens, president of the National Association of Realtors. The 2005 "Cost vs. Value Report" by the association and Remodeling magazine found that homeowners were able to recoup only 83% of the cost of a family-room addition and 82% of a midrange master suite.

2. Making your home into something it's not

Don't change the general architecture of the home, and make sure that renovations match. For example, a modern steel door doesn't belong on a ranch house built in the 1970s, Mrs. Slaughter says.

Changes that are obviously inconsistent with the home's style will limit the number of people interested in buying it, says Michael Nagel, vice chairman of the National Association of Home Builders' Remodelors Council. This is especially true for structures such as the Frank Lloyd Wright house he's working on; it's relevant to a somewhat lesser degree for a typical tract home.

3. Changing a room's function

Completely altering the purpose of a room is risky. Keep kitchens as kitchens, and bathrooms as bathrooms. They were built that way for a reason.

"We all expect basic functionality," Mrs. Slaughter says. "If you start changing the basic items that you expect out of your home, you're really customizing it for yourself."

Despite the rising number of people who work at home, building an office also can be a negative, Mr. Stevens says.

The National Association of Realtors/Remodeling magazine study found that installing a computer set-up, office storage and commercial carpeting while also rewiring the room for computer and fax use produced only an average 73% return of cost.

4. Doing it yourself - when you shouldn't

Be extremely confident you're capable of taking on a project before trying to do it yourself.

"I wouldn't try and fix my own car; why would someone want to fix their own house?" says Mr. Nagel, who often sees sloppy tile jobs done by amateurs.

5. Underbudgeting

Don't underestimate how much projects will cost. Expenses usually are added, not subtracted.

Homeowners routinely go 20% to 30% over budget, Mrs. Slaughter says. "People not only underbudget from a monetary point, but they also underbudget time," she says. A prospective buyer walking through a home isn't going to see the glass as half full when a project is half done.

6. Making unneeded renovations

When remodeling for resale, don't waste time with renovations that won't pay off. If you must have a pool, it helps to install a new patio, porch and alternative entryway, Mrs. Slaughter says, but you still may have to lower your expectations on who will be interested in buying.

Proceed first with projects that are going to have the highest rate of return, experts advise. In the last four annual editions, the National Association of Realtors/Remodeling magazine study has identified four renovations that show the greatest return at resale: improvements to siding, windows, kitchens and bathrooms.

In the 2005 study, a midrange bathroom renovation paid off with an average 102% return on investment and an upscale bathroom renovation recouped 93% of its cost. A midrange kitchen renovation recouped 91% of its cost on average, and an upscale kitchen recouped 85%. A minor kitchen remodeling job returned 99% of its cost.

7. Neglecting maintenance

Proper maintenance and annual upkeep may be the most important improvements of all.

Clean the gutters to protect the exterior from water damage. Trim shrubs. Check for termites. Keep track of annual checkups - and use that as a selling point. Annual maintenance pays back handsomely when you sell. And before the house goes up for sale, experts recommend a fresh coat of paint.