I previewed a beautiful home here near Joint Base San Antonio a few weeks back. I’d sold four homes in that neighborhood over the previous couple of months, and this couple needed to, as well; it was time to PCS.
I knew the floor plans in that neighborhood well. Only about 10 existed, and most of the homes were one of six floor plans. As soon as I drove up to this home, though, I saw that it was a little different. Not only had the couple purchased by far the largest floor plan, but they had added a lot of upgrades.
In a neighborhood of homes typically about 3,000 square feet, this home sat at a solid 4,500 square foot, about 500 feet larger than almost anything in the neighborhood as well as all of the surrounding neighborhoods.
In a VA Home Loan appraisal-dominated market, finding relevant comparables for a home of this size would be challenging, to say the least. I didn’t want to overprice the home for this couple and have an appraisal issue with financing.
Here was the challenge: To find a comparable home in that area, I would need to find several homes of no more than roughly 500 square foot greater or less than this home that had sold within the past six months.
Challenging, yes, but not impossible.
The devil is in the details, though. And, man, this couple went for the details.
To start, they had chosen every possible upgrade that the builder offered, and some that they didn’t. They added the most upgraded cabinets, the most expensive flooring, an iron rail banister, upgraded interior doors, upgraded window treatments, the most upgraded granite, and upgraded lighting fixtures. In total, they added about $40,000 in additional upgrades above and beyond what their neighbors had selected.
And then, three years later, they ripped most of them out.
They changed the colors.
In a $15,000 purchase, they replaced every item in their kitchen, adding new cabinetry, granite, and a backsplash. It wasn’t that anything was outdated in their previous kitchen–in fact, the color scheme was one of the most popular in the area–but rather, they wanted different colors, a different feel to their kitchen. He had received follow-on orders to the same duty station, and they wanted a change.
I can definitely appreciate wanting a different feel to your house; I, too, get bored of the colors of my cabinets. I see enough houses every day to get bursts of inspiration to convert my modern, espresso-colored cabinetry into a bright white, rustic, French country-chic, farmhouse-sink bedecked cooking extravaganza, but I probably won’t. I don’t plan on staying in my home forever, so it doesn’t make financial sense to make the investment.
When you are planning on staying in your forever home–an option that most of us who read the MilitaryByOwner blog don’t have just yet–then it’s advisable to not overspend on upgrades that you won’t get a lifetime’s worth of enjoyment out of.
Unfortunately, this family fell into the same category as the rest of us. This would not serve as their forever home, and with that many upgrades in the house, they didn’t want to see what might happen to their beautiful home if they converted it into a rental that they could later live in.
The problem was that no one had ever explained to them that adding money into your home doesn’t necessarily translate into adding value when it comes time to sell your home.
While the new colors in the kitchen were nice, the extra expense did not increase the value of the home, because nothing about the substance of the home actually changed; it still had upgraded cabinetry, stainless appliances, and upgraded granite. Selling their home would mean a painful, expensive bill for this couple on closing day.
The key takeaway from each of these updates is simply not to outspend your neighbors. If you plan to make improvements to your home that you will eventually resell, it might be worth your while to consult a Realtor who has recently sold homes in your neighborhood to ask whether your intended upgrade would be beneficial.