As a real estate appraiser and Realtor in San Diego, I get this question all the time. How can I increase the value of my property? I will give my opinion on what are the best ways to increase value and what you may be spending too much money on that you will not necessarily recoup when you sell. Obviously, my market area is different than yours but many of my points are fundamental to the general audience.

“It’s all about the kitchen”
You hear it all the time; spend money with a kitchen renovation as “kitchen’s sell the home”! While the kitchen (and bathroom) are the most common areas of the home to be renovated, I would proceed with caution. It is true that a nice kitchen will most of the time look favorable to a prospective buyer but that is not always the case. If you remodel your kitchen with the most recent and trendiest design and materials straight out of HGTV it might look appealing to you but you have to remember that everyone has different tastes and preferences. One person may like granite countertops while another would prefer quartz. Some people prefer a modern look with shiny white cabinetry and concrete floors while others may want a more traditional or rustic feel. My best advice is to remodel your kitchen to what is typical for your neighborhood if you’re looking to add value. If the average kitchen has ceramic tile countertops and prefab cabinetry, you may be spending too much on imported slab countertops and custom cabinetry. Sure it may look and show fantastic but you may not recoup on your investment if your intention is to sell or increase your home value. If you are planning to live in the house for many years and you are doing the renovation for your family’s use, then by all means do the renovation. But please understand that you don’t always get back in value what you pay. Remember this mantra, “cost does not always equal value”. For example, I was once in a neighborhood where the median home was priced at $500,000. The typical kitchen remodel was around $30,000 and was expected by home buyers. I appraised a property in this area where the owner had a gorgeous kitchen remodel which included hand-carved imported kitchen cabinetry from Italy. He spent $75,000 just on the cabinetry. His kitchen remodel totaled over $150,000, in a neighborhood where homes were only selling for $500,000. “Cost does not always equal value”.

“Should I do a room addition and add more square footage?”
This again goes back to doing what is typical for the neighborhood. If you are in a neighborhood where homes have a range of 1,000 – 2,000 square feet with a median size of 1,500 square feet, you will see diminishing returns on the extra living space beyond the median. This is because when the typical buyer moves into a neighborhood they know what to expect in terms of the size and overall design of the house. This is supported by the fact that the selling price per square foot tends to drop off as the size of the home starts to exceed the typical size (diminishing returns). Buyers who are looking for a 3,000 square foot home on average will be looking at neighborhoods that have an abundance of similar homes that size. You don’t want to be the homeowner who has the large McMansion while the rest of your neighborhood could fit in your garage. A good case to add more square footage or another room is if it makes sense to you (ex. more family members or a new baby) and you have one of the smaller models which is below the average-sized home. In that case, you may be able to recoup a larger percentage of your investment rather than someone who has twice the square footage of all the other homes.

“My new pool will surely increase my home’s value!”
Not so fast. Again this goes back to what is typical for your neighborhood. If you are in Phoenix, Arizona where summer temperatures soar over the 100 degree mark daily and most homes in your neighborhood have a pool then it is almost expected to have a pool. I have interviewed real estate professionals in Arizona and they tell me most buyers won’t even look at a home if there isn’t a pool in certain neighborhoods where it is the norm. But in my market area of the Bay Area, California it’s a little bit different. The cost to put in a pool does not normally equal the same increase in value if any. Not to mention California is going through one of the worst droughts in its history. High maintenance costs, as well as heavy water penalties, are definite issues with owning a swimming pool. I was speaking to some local pool and landscape contractors and the ones who have been busy over the last couple years have been those that are filling in and removing pools not creating them! They needed to change their business model to stay in business and I don’t blame them. Many East Bay Area cities that were once popular for having neighborhoods with swimming pools are rethinking the costs. When analyzing recent sales in Livermore, Dublin, San Ramon, and Pleasanton I have been seeing similar model homes with pools and without pools selling for virtually the same price all things being equal. There are many buyers who are balking at purchasing homes with pools because of the high costs of upkeep. Buyers who prefer to garden, or have small children are also more skeptical of buying homes with pools. Things may change in the future especially if the drought ends and water restrictions are lifted. But until then, it is my opinion that the costs associated with adding a pool is not worth it when you are looking to recoup your investment.