This is the last of our three-part series called the Simple Truths of Real Estate. Just like in life, there are some things in real estate that are always true; no matter the geography or the market condition. To recap…
Truth#1: It doesn’t matter what the neighbors’ home sold for in the past
Home values are dynamic. They rise and fall with market conditions, just like a company stock on an exchange. What a house was worth five years ago, last month or even last week has no bearing on the value of a house today. This can be a difficult pill to swallow.
Truth #2: A home is worth what a ready, willing and able buyer will pay for it.
What matters is what a buyer thinks it’s worth — and what a buyer will offer on a property. Also, if the buyer requires financing, whether a lender will approve a loan at that amount.
Truth #3: Home improvements will not make a home value increase in an amount equal to or greater than what was paid for the improvements.
A corollary to the third law of real estate is that money spent on maintaining a home adds zero to the home’s value.
The Skinny on Home Improvements
So, you are thinking of investing is a home improvement project and you want to get the best return for the amount invested where should you spend your money? Think about the kitchen and bathrooms. Kitchen and bath improvements tend to have higher rates of payback than others. It is rare; however, that the improvement will add equal or more value to a home than what it cost.
What if My Home Improvement Doesn’t Add Value?
One of the questions that I receive quite often from homeowners is, “Should I do a home improvement if it doesn’t add value.” No one wants to decrease the value of their home, but owning a home is not just about increasing the value of a home it is about enjoying your home. My advice, if you are going to use and enjoy your home improvement then you should do it.
What About Home Maintenance?
Cleaning the gutters, having the HVAC services twice a year, fixing the roof doesn’t increase the value of your home. It means that you are a good and conscientious homeowner, but it doesn’t increase the value of your home.
Sure, the fact the water heater, air conditioner, and roof are newish will likely appeal to some buyers. That might well be what triggers their decision to buy your home versus another one, but they don’t make the home intrinsically more valuable.
Does it suck to dump $3,000 into an air conditioning repair on a home you’re not even going to live in? You bet it does. But try selling a home without air conditioning in places it gets over 80 degrees. Good luck selling a home anywhere without a water heater or a roof.
If fundamental repairs are needed, the owner is just going to have to suck it up and make them and not expect to recoup any of that money — or be prepared to discount the list price to compensate.
About Log Pond Realty
Home is where your story begins. Home is where hopes and dreams are born, memories are made, and lives are lived. We would love the opportunity to assist you in writing your new story.
We service the Triangle region of North Carolina including Raleigh, Cary, Apex, Holly Springs, Morrisville, Fuquay-Varina, Durham, Chapel Hill, Wake Forest, and Garner.
Phone 919.589.3576 | Email at firstname.lastname@example.org