Dreaming about a home upgrade, whether it’s an extra room or a brand-new kitchen, is common, but before diving headfirst into hiring a contractor, it’s worth taking a hard look at the financial return on investment (ROI). For those planning to enjoy their upgraded space for years, the upfront cost may be worth the splurge. However, if selling the house is on the horizon in the next few years, it’s smart to think twice about renovations that won’t significantly boost the property’s market value. Some of the most tempting projects, unfortunately, offer the lowest payback when it comes time to sell.
Take the allure of an in-ground swimming pool, for example. Installing one can cost nearly $30,000 when you factor in fencing, landscaping, and other extras, but the pool might only add a fraction of that—around $5,000—in home value. Add to that the reality that many buyers shy away from pools due to maintenance concerns or safety issues, especially if they have young children, and it becomes clear this isn’t the investment most hope it will be. Pools may sparkle in the summer sun, but they often leave sellers in the deep end financially.
Kitchen remodels are another common trap. While a minor kitchen upgrade—think fresh paint, new cabinet hardware, or energy-efficient appliances—can yield a good ROI, the numbers don’t hold up when the project becomes extravagant. Stone countertops, custom cabinetry, and luxury fixtures may create a dream kitchen, but sellers shouldn’t expect a dream payout. The same logic applies to bathroom overhauls. Those upscale walk-in showers and high-end fixtures might make mornings feel like a spa retreat, but sellers will only see about 40-50% of their investment returned in the final sale price.
Garages also present a renovation conundrum. While homes with garages tend to be more appealing to buyers, particularly in areas with harsh winters or limited parking, turning a garage into an additional bedroom or living space often backfires. The value gained from a garage-turned-bedroom doesn’t compare to what buyers might pay for a traditional garage. And when it comes to flooring, ripping out existing wood floors to install wall-to-wall carpet is almost always a losing move. Homes with hardwood floors not only sell faster but also for more money, with refinished floors yielding nearly 150% of their cost in added value.
Even additions, like a new bedroom or bathroom, can be a financial misstep. While these improvements do add value, the cost of construction often dwarfs the return. Sellers can expect to recoup only about 25-35% of what they spent. For homeowners weighing upgrades, the message is clear: not all projects are created equal. A little strategic planning now can save a lot of disappointment—and cash—later.
