Sometimes, home improvements have to take place thanks to a structural flaw, aging plumbing or another major issue that needs fixing. It’s when a homeowner decides to renovate to align their home with their personal taste or with the intent to sell that they can get themselves in trouble, said Jeremy Sopko, CEO of privately owned mortgage lender Nations Lending.
Sopko said there are certain renovations that, if done correctly, will have a strong return on investment, such as updating bathrooms and kitchens. However, one of the worst things you can do is make renovations that aren’t supported by the local market (i.e. potential buyers).
“Fabricating and customizing to your very specific tastes doesn’t necessarily mean those are the tastes of the market,” he explained. That’s especially true of lavish upgrades that don’t fit in with the surrounding environment. “The classic real estate advice is that it’s never good to have the most expensive house in the neighborhood. If, after your upgrades, you’ve got a $600,000 home in a neighborhood surrounded by similarly sized homes selling at $400,000, it’s a risk,” Sopko said.
So before you pick up your sledgehammer, find out what specific types of home renovations can bring down the resale value of your home or make it tougher to eventually sell.