From the WSJ Real Estate Archives

Which Improvements Will
Increase a Home's Value?

by By Robert Irwin

Question: My husband and I put in landscaping and additional trees on our property around our house. Later we found out that it added little to nothing to the value of our home, based on an appraisal we had done. We plan to sell our home in the next few years. What kinds of things will add value to our home so that we can get the maximum investment out of our home?

Question: Which improvements would best bolster the value of a 15 year old home/investment in an affluent Florida neighborhood? Pool/patio, kitchen/bathrooms, or carpet/flooring?

-- D.M.C., Nashville

Question: Where can I go to get the definitive answer on the value of various home improvements?

-- Karyn, Milwaukee

Answer: Probably the most important question to answer when considering a home improvement is how much money the project will return when you resell. The last thing you want to do is to over-improve, to put more money into your home that you'll be able to get out. I call this the "white elephant syndrome" and it usually comes about when people act from their heart's desire and not their head.

Q&A: View other real-estate questions and answers.

The truth is that most projects will not return dollar for dollar. For example, adding insulation or putting in a more efficient furnace will make your home far more livable, but usually will not get you very much in return when you resell. That's because future buyers won't see most of what you did. Rather, they'll assume that the house should have good insulation and heating, and they won't want to pay additional money for it.

On the other hand, some projects return more than dollar for dollar. For example, if the home is more than 10 years old and has a "tired" look, doing fix-up work just before you sell pays off. This includes repainting the front, putting in a new front door and handle, fixing up the driveway and landscaping the front yard -- all should make money for you. Doing these things may not much change the appraisal (which calculates intrinsic value), but they will improve the "curb appeal" of the home and should result in a quicker sale for more money.

Generally speaking the other areas of the home improvement that give you the best return are the kitchen, baths, and floor covering. However, a lot depends on 5 factors:

  • How old is the house? Homes that are older than 25 years often need a complete makeover. Less than 25 and a minor renovation may do.
  • What are the neighborhood norms? You want to improve up to the level of your neighboring houses. Go beyond that and you'll be wasting money. Do less and you probably will still end up with a home that buyers consider a "fixer."
  • The market. In a hot market as we have today, people are willing to pay extra for improved homes. In a cold market, as we had in the early '90s, people wanted to spend as little as possible, so shunned improved homes.
  • Your area of the country. A pool and patio in Florida make sense, while they might be overkill in Maine.
  • The price range of your home. In a high quality home, you'll want to put granite or Corian® counter-tops in a kitchen. In a modest home, perhaps tile or laminate counter-tops will do.Any list of improvements must take into account the quality of the home, its age and the other factors noted above. Beware of lists found in magazines that simply give a percentage for different areas of the country without a much more detailed analysis. My book, "Tips & Traps When Renovating Your Home," (McGraw-Hill, 1999) gives a complete explanation of how to evaluate a wide variety of improvement projects for their return on investment by home quality and home age.
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    Mr. Irwin has more than 25 years' experience as a Los Angeles-area real-estate broker. He is the author of more than two dozen books about real estate and is recognized as one of the most knowledgeable writers in the real-estate field. Mr. Irwin's most recent book is "Robert Irwin's Power Tips for Buying a Home for Less," (McGraw-Hill, 2000).

    Submit your question about residential real-estate and home-improvement issues to homes.wsj.com.

    Shirley, Boulder, Colo.

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