The Worst Home Improvement Returns on Investment

We often talk about the top 10 best home improvements, or where is the best place to spend your money to make your home stand out. Working on the "Flip-Side" of that; here are the worst home improvement returns on investment.

Many people blindly assume that every improvement they make to their home will bring an automatic 100% return or close to it. Unfortunately this is not the case…far from it. One of the best home improvements you can make to your home is a remodeled kitchen and that generally only brings a 75% return!

I don’t know how many times over the years that I have done an evaluation on a sellers home and they were disappointed to find out the value was not quite what they expected. More often than not it can be traced to the fact that money was put into the home in places where there is a very low return.

So what are some of the worst returning investments in a home?

Swimming pools

Let me 1st preface by saying that this by saying that adding a swimming pool somewhere other than Seattle may add more value in a home. In Seattle the time you are able to truly enjoy the use of a swimming pool is around three months. The weather in the northwestern states in not the same as down south or out west in the Arizona area where temperatures remain much warmer for a larger part of the year.

Swimming pools are generally far more expensive to install in Seattle because of our rocky soils. The cost of an in-ground swimming pool can vary quite a bit depending on the size and whether it is a gunite or liner pool. On the lower end you very basic liner pool is going to cost around $40,000 by the time your figure the cost of the pool, fencing, landscaping, etc. A luxury swimming pool can easily go upwards of $100,000 if you go all out with a nice design and frills such as a cabana, fireplace and fancy surfaces around the pool.

When you install a swimming pool in the Seattle area what you really should be thinking about is the enjoyment you are going to get out of having it. Do not expect that you will be getting a good return on your investment. Swimming pools often times can actually end up being a detriment when selling a home. There are many buyers that flat out will not buy a home that has one no matter how beautiful it is.

Are there times where a buyer is specifically looking for a pool? Sure…if you are lucky you may find a buyer that will pay a little more for a home with a pool. Just don’t expect that it will be anywhere close to the money you have sunk into the ground.

A new septic system

While you would never hear a couple saying “hey honey what do you think about getting ourselves a beautiful new septic system?”, the fact of the matter is that many home owners incorrectly assume that a buyer will give you something because you have one. Fat chance!

Replacing a septic system is really one of the worst nightmares a home owner can face. The cost involved with installing a new title V system can put a huge dent in your wallet. The cost of replacing a septic system can vary quite a bit depending on the soils and the ground water level. If there are tough soil conditions and a high water table you could be shelling out $40,000 – $50,000 or more to have a new system installed.

Even if the soil conditions and water table are very favorable you could still expect to be handed a bill of around $10,000. There is no question that replacing a septic system is a huge investment. Replacing a septic system is obviously not something you run out and do because you just feel like it. If your system fails it is a fact of life that it must be replaced.

The problem is a buyer could care less if you have a new system in the ground. All a buyer is going to care about is when the toilet flushes it works. Do not expect a buyer to pay for your septic problem! You will be lucky if you get the buyer to pay 10%-20% of the cost of installing a new system.

A new roof

There is no question that one of the major components a buyer cares about when purchasing a home is the roof and basement. Of course this stems from the fact buyers never want to think about having a water issue. Surprisingly though home buyers do not care if you have a beautiful new architectural shingle adorning your rooftop.

As an example lets take two identical homes in the same neighborhood one with a twenty year old roof approaching the end of it’s useful life and another home with a new roof. Let’s also assume the new roof would cost the seller $12,000 to replace. Don’t expect the buyer to pay an additional $12,000 for the home. Buyer’s rarely ever pay for the mundane. Buyer’s are far more willing to pay extra for things they can enjoy on a daily basis. A new roof is not one of them. A gorgeous new bath….different story!

There is no questions that a swimming pool, septic system and roof are three of the worst home improvement for return on investment in a home. What are some of the others? According to the latest cost v.s value remodeling report for the Northwest here are a few more home improvements that do not fair well when it comes time to sell:

A bathroom addition which comes in at a return of 59.5%
A home office remodel which returns 48.1% on investment.
A master suite addition which comes in at 65.2%
A deck addition also has a low return at 60.8%