What the Value!

Because of the housing inventory shortage, many homeowners have found themselves priced out of the market or frustrated because they could not compete in multiple-offer situations. As a result, many looked at alternatives, including renovating or adding onto their current home—a logical solution given the challenges of moving elsewhere.

In a world of modern technology and endless home remodeling shows, homeowners often have big ideas about transforming their property into their own “dream home.” However, a dream home is not always something the next buyer is willing to pay for.

As an appraiser, I am often asked what adds value to a house, and the simple answer is: whatever the market is willing to pay for. Not all updates or custom features appeal to every buyer, and some may carry far less value than the homeowner expects—or sometimes no measurable market value at all.

I was recently completing an appraisal assignment in a rural area when the owner became fixated on the built-in bread oven incorporated into the fireplace. The house itself was newer, and the owners had specifically designed the fireplace to include this oven when the home was built. They were insistent that it was a valuable feature.

I explained that during the analysis process, I would determine whether it had any contributory value. At the same time, I could clearly see the broader appeal of the property: a modern post-and-beam home situated on 15 acres, with multiple outbuildings, a workshop, and a barn equipped with electricity and water for horses and hay storage.

Personally, I have lived in my own home for 25 years and have never once lit my fireplace. If I were a potential buyer of that property, my thought process would likely be: I get the acreage, the barn, the outbuildings, and the style of home I want—and, as a bonus, there happens to be a bread oven.

Another example is, down the street from where I live, a house recently came on the market that I assumed would sell quickly, as homes here are typically under contract within days. I always monitor local listings out of my own curiosity and interest in my market area.

After about a week, the price dropped by $10,000. Two weeks later, it dropped another $10,000. Ultimately, the list price was reduced by nearly $40,000 before the property finally went under contract after more than 40 days on the market.

Ironically, I later crossed paths with the listing agent, who is highly experienced, and mentioned that I was surprised the house had not sold sooner. He replied, “Me too.”

He explained that there was market resistance around a leased solar system that cost approximately $300 per month. Buyers liked the house, but the added monthly cost they would need to assume priced many of them out of qualifying.

This is another perfect example of how a feature that is beneficial to the owner at the time may actually create resistance in the marketplace later on.

In-ground pools offer great enjoyment for some people, but they are not desirable to everyone. Installation costs can range from $50,000 to the sky, depending on the features included. However, the return is often only a fraction of the cost.

A pool in one area may contribute minimal value—for example, in the Northeast, where use may only extend for four months each year; however, in warmer climates, year-round usability may have a higher contributory value.

Some buyers may avoid a property with a pool because of maintenance, insurance, and safety concerns. Others may view it the same way as the bread oven example: the house has what they want, and the pool simply comes as a bonus.

When renovating, remodeling, or adding onto your home, you are naturally focused on making it fit your lifestyle and vision. That is completely understandable. However, your “dream home” may not be the same as the next buyer’s dream home.

The value you believe you added may be priceless to you, but the next buyer may not be willing to pay what you think it is worth.

Before making improvements, homeowners should ask themselves a few important questions:

• How long do I plan to stay in the house?
• Does the improvement fit my neighborhood and market area?
• Am I improving for my own enjoyment, or for future resale?

What you want to avoid is over-improving the property relative to the neighborhood. For example, a $100,000 kitchen renovation in a market area where buyers do not typically support that level of finish can create a mismatch between cost and contributory value.

In reviewing the 2025 Cost vs. Value Report for New England, the areas that have provided the highest returns outside of general upkeep and maintenance are midrange upgrades on kitchens (43.3%) and bathrooms (59.8%), with upscale renovation returns indicated lower 33.2% for kitchens and 27.3% for bathrooms.  Other areas that provided significant returns were backup generators (97.5%), composite decking (82%), and basement remodels (75%).

The takeaway is simple: your house is your castle, and you should absolutely make it enjoyable for the way you live. Just remember that the features and upgrades that make it perfect for you are not always the same features that the next buyer will be willing to pay for.