A client recently asked me what our team’s list would be for improvements they should make to the property they're buying. Generally speaking, we are most concerned about resale value. That said, we prefer to leave that decision to the client because, quite frankly, it is their house, their money and their budget, and it’s a space that THEY need to love, enjoy and be happy in. So we like to work with the client to strike a balance between resale value and their personal preferences and desires.
For instance, if a home only happens to have one bathroom, a lot of Realtors would traditionally say, “DON’T GET RID OF THE BATHTUB!” due to resale value concerns. I say: if you hate bath tubs and want to install a really nice shower, do what makes you happy! It should be a-okay and worst case scenario, you can switch it back before selling. Being happy in your home is the top priority. In the Bay Area, you're spending $1M-$2M (or more) to purchase a home. There is absolutely no reason to suffer and just suck it up for the sake of resale value when you don't even know if or when you'll resell.
Certain projects add more resale value than others. Some improvements that generally have the best financial impact include:
remodeling your kitchen
remodeling your bathroom (or adding a bathroom)
improvements to the facade/front of the house
replacing/upgrading your roof and/or windows.
These are tried-and-true ways of putting money into your home to get more out of it at resale.
Conversely, some projects are not necessarily likely to increase value dollar-for-dollar. Yet some can certainly be attractive to some buyers:
luxury upgrades
room conversions that don’t fit with the floor plan
garage conversions
swimming pools
high-tech bells & whistles
These are among the improvements with the lowest rate of return on resale. Other examples of improvements you can make to your home that might not add a lot to your home’s resale value--but might make living there much more enjoyable for you--are extensive professional landscaping and installing solar panels. However, that doesn’t mean you shouldn’t make any of these changes to your home, particularly if one of these projects will turn your new home into your dream home.
The bottom line is: if installing a swimming pool makes your life more enjoyable, then do it! Resale value shouldn’t be completely ignored, but it doesn’t have to be the most important factor in your decision-making process. A home is often the largest investment a person makes in their lifetime, but it doesn’t have to be a completely-monetary proposition. Any good economist will tell you that enjoyment and happiness have utility (and value) too!
