What are the top upgrades you can make to your home which make it harder to sell?

Ralph
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Have you ever poured your heart, your soul and your savings into home improvements and later to discover they actually made your house harder to sell? Well, let me tell you right now, you're not alone in that. Today I'm going to share a powerful story about my client.

His name's Harold, who learned this lesson the hard way. Listen to this. Spent over $75,000 on upgrades and all of a sudden he found out he had an unexpected job transfer and and it forced them to sell.

Well, stay tuned to learn which home improvements could actually hurt your home's value and how to avoid making the same costly mistakes.

Podcast Announcer
00:00:38

Welcome to the Ask Ralph podcast where listening to an experienced financial professional with over 30 years of experience can help you make sense of confusing questions, current headlines and industry trends about taxes, small business, financial decision making, investment strategies, and even the art of proper budgeting. Ask Ralph makes the complex simple by sharing his real world knowledge from a Christian perspective with all things financial.

Now here's your Host, Ralph Estep Jr.

Ralph
00:01:08

[00:00:43] Ralph Estep, Jr.: Welcome and thank you for joining me as we continue our journey together seeking to master our finances, balanced with our Christian faith. Now if you missed yesterday's show, yesterday, I talked about reverse mortgages and I shared some eyeopening truths about why these loans might not be that financial solution you're looking for.

[00:01:01] Ralph Estep, Jr.: Yeah. Tom Selleck does a nice job on the commercials, but when you lift up the hood, it might not be what you expected. So I'm gonna encourage you if you missed it to go check it out. And if you know anybody that's thinking about a reverse mortgage, do me a favor and share the show with them.

[00:01:16] Ralph Estep, Jr.: Well, today's question comes from Michelle and she writes this.

[00:01:19] Ralph Estep, Jr.: "Dear Ralph, my husband and I just bought our first home and we've got $50,000 saved for improvements. We want to make sure we make smart choices that will increase our home's value. But after hearing horror stories from friends who lost money on renovations, we're scared to make the wrong decisions.

[00:01:38] Ralph Estep, Jr.: Can you help us understand which upgrades we should avoid?" Well Michelle, congratulations on your new home and also that's great. You've set aside that money for renovations and that truly is a great question. It's one that I get asked pretty frequently in my practice here. And as I said early, I had a client that learned that the hard way. I'm gonna share that story in just a few minutes. But I'm going to share today

[00:01:59] Ralph Estep, Jr.: some things that you definitely want to avoid so you don't end up losing your investment. So Michelle, great question. Now, before I continue, remember, you could submit your questions. You do that at justaskralph.com because that's what this show is all about. And that's answering your questions about faith and finance.

[00:02:18] Ralph Estep, Jr.: Michelle, I was racking my brain to find the right scripture that would tie into your question today. And I got into the book of Proverbs and I found this one. This one is in Proverbs 24, verses 3 and 4 and I think it nails it. It says this. "By wisdom a house is built, and through understanding it is established; through knowledge its rooms are filled with rare and beautiful treasures." So I thought about it

[00:02:44] Ralph Estep, Jr.: Michelle, let's focus on that today. And let's use that as some real wisdom to answer your question about what you should avoid with those home improvements.

[00:02:57] Ralph Estep, Jr.: Well I told you I'd share a story. Well, let me tell you about Harold. Now Harold comes to us from Nashville and he had listened to the show.

[00:03:04] Ralph Estep, Jr.: He tuned into our show several times and he called me one day and he booked a call with Ralph, right from our website. You can do the same thing if you want. Just go to askralph.com. At the top of the website, you'll see a button that says book a call with Ralph, and that's what he had done. And we did the Zoom call.

[00:03:20] Ralph Estep, Jr.: We started talking, and what he told me is he had just inherited a hundred thousand dollars and he wanted to use that for some home upgrades. He got this money from his father's estate. And see, here's where I said to Harold, look, I think you really need to be concerned and careful about what you do. Now, he was not a first time home buyer.

[00:03:40] Ralph Estep, Jr.: And he was telling about this beautiful new home he bought in Nashville. And I tried to explain to him the connection between money, choices, and values. I tried to caution him, but in the end he really ignored me. So I heard from him a few months later and he tells me, well Ralph, here's what I did. He says I spent 30,000 on a new home theater system. And I'm sure it was great.

[00:04:03] Ralph Estep, Jr.: He told me about all the cool stuff he had. And listen as a man, I'm kind of envious about that, but $30,000 is a lot of money to spend. He then spent 20,000 to convert his garage into a gym. Now again, we could say that was wise spending he's doing something for his health, but $20,000 a lot is money to spend. And the last one was the kicker.

[00:04:23] Ralph Estep, Jr.: He told me this about to fell out of my chair. Almost lost myself in the zoom video. He spent $25,000 building a Koi pond. Now, if you don't know what I'm talking about, it's a pond with decorative fish. And I've never had them, but as I understand, these queer finicky little guys, and they cost a ton. So like I said, I had warned him.

[00:04:43] Ralph Estep, Jr.: I said, listen, dude, I think that's a mistake. For a couple reasons, everyone has different tastes. And this wasn't his first home. It wasn't like he, you know, never had a house before he had to go over the top, but here was the difference. And I've seen this happen so many times. This was really the first time that Harold had what I'll call real money. He'd gotten that money from his dad.

[00:05:06] Ralph Estep, Jr.: It wasn't money he actually had to earn, so he had this money and he wanted to make some home improvements. Now let's fast forward a few months. All of a sudden Harold was working for this company and they offer a number of promotion with this company, but he had to move to another state. And I remember Harold called me frantically.

[00:05:25] Ralph Estep, Jr.: So we've got to talk again, Ralph, we got to talk again. And he had sunk all of that money into his house. And I said, well, Harold, what you're gonna have to do is start by meeting with a realtor. So he went and talked with a realtor yet a couple of them actually come up to the house because the first one told them that he was in trouble.

[00:05:40] Ralph Estep, Jr.: The second one said, well, I think we can sell it. And then the third one just said, oh yeah, this is no problem. So listen, if you're going to be in the market to sell your home, get a couple of different opinions and I'm going to share how this all turned out for Harold later. But let's talk in general about those problem upgrades.

[00:05:57] Ralph Estep, Jr.: Cause I have assembled a list of these. The first one, and this used to be a big thing. When I was a kid, all of us had wall to wall carpeting in our house. I remember this shag carpet we had back in the late seventies when I was a kid, but now people prefer hardwood, mostly because of allergies and allergen concerns. It's also so much easier to maintain it.

[00:06:17] Ralph Estep, Jr.: And truth is, in my home, we've got some great laminate products. Now our first floor of our house is traditional hardwoods. But when we moved in, there was carpet on the second floor. I said to my wife, Hey, I don't really care for this carpet. It's a lot of pet, we have two German shepherds, we had two at that time, we just have one now. But we have pets and it's just a mess to keep clean.

[00:06:38] Ralph Estep, Jr.: And we found this laminate product to actually, in my opinion is more durable than even the hardwoods. So that's the first thing. People do not appreciate wall-to-wall carving anymore. I guess the seventies really have died. The second thing is what I found on my, in my research was these textured walls or popcorn ceilings.

[00:06:57] Ralph Estep, Jr.: Again, it goes back to a time when everybody likes this and I'm going to tell you a quick story. I had a friend. And he bought this house, not too far from us here. He was actually in Smyrna, Delaware. And he bought this house, a beautiful place, nice property, big house. And this person had put these popcorn ceilings all throughout the house and worse than that, they even had glitter in it.

[00:07:18] Ralph Estep, Jr.: So I guess it was kind of cool back in the early eighties or whenever they did it, but it cost him a ton to remove it and he absolutely hated it. He would tell me at night you walk past and you see this sparkling. You know, you're trying to relax and you got sparkling and popcorn all over everything.

[00:07:34] Ralph Estep, Jr.: So that's number two, those textured walls and popcorn ceilings. Number three, and this is all about personalization. I'll call it personal design elements. For example, bold wallpaper. I'm gonna tell you a crazy story about this. So my grandmother, God bless her. She'd been gone for a while now. But she actually had a couple of rooms in her house that had multiple wallpapers in the same room. Yeah, you literally could turn from left to right

[00:07:57] Ralph Estep, Jr.: and you'd see completely different kinds of wallpaper. And she picked some unusual colors and she also had some unusual fixtures. So those are the things you're going to want to avoid. Those personal design elements. Yeah. You might love them. But if you ever go to sell your house, you are going to struggle. Let's look at number four. And that's formal dining rooms and this used to be the norm.

[00:08:18] Ralph Estep, Jr.: When I was a kid, everybody had a formal dining room. You had the big table and chairs. It was the place where I know as a kid, that's where we would eat dinner or maybe Easter, Thanksgiving, Christmas. I mean, you pretty much weren't allowed to go in that room or sit on what my mom called the nice furniture unless it was some kind of special time of year. Now these days, that's less appealing. People like that

[00:08:39] Ralph Estep, Jr.: comfort of that casual style and they like the flexibility. And the problem is with these formal dining rooms and a truth be told it's more of this cut up floor plan. People are liking those open floor plans. So if you're thinking about renovating and you're going to put in a formal dining room, I would rather say you don't do that.

[00:08:58] Ralph Estep, Jr.: Maybe you want to open up the formal dining room and make it more flexible casual space. So that's number four, those formal dining rooms. Another thing to be on guard from, and a couple of realtor friends told me this. Over engineered features. Because this can actually decrease the perceived value of the home. Maybe you know, overdone vinyl windows, quartz countertops. They mentioned curved archways, any kind of those over engineered customizations. Because if you don't like it, it's going to be seen as, oh, this is something I got to go and fix before we set or before we move in. So that's number five.

[00:09:33] Ralph Estep, Jr.: That's those over engineered features. Number six. This is a personal pet peeve of mine. When my wife and I, and the kids been out looking at homes before now, we've been where we're at now for 10 years. But I remember the last time we were out shopping, there was a ton of inventory, you know, houses out there where they weren't move in ready.

[00:09:52] Ralph Estep, Jr.: And the statistics show that 35% of buyers want it to be move in ready. They don't want those renovation headaches. And so many projects aren't even finished. I tell you a funny story. I remember when I first met my wife. Her home there where her family live, they had a second floor, was like a Cape Cod type house.

[00:10:12] Ralph Estep, Jr.: And I remember going up the steps one time, they had sort of a fancy rec room upstairs and we were going up the steps and I had never noticed it before, but this one day the lights were on. And all of a sudden I realized that there were paint marks about three quarters of the way up the hall, but not all the way to the top.

[00:10:27] Ralph Estep, Jr.: What turns out my father-in-law had every intention of painting the walls, and he did all he could reach. But then when he reached the top of the steps and it opened up to like a, if I recall maybe a 10 or 12 foot open space, he didn't have the ability to go do that. So that's the other problem.

[00:10:42] Ralph Estep, Jr.: A lot of these projects go unfinished. So watch out for those unfinished projects. Number seven is luxury appliances. I'll tell you about my story about that one in a second. And here's the problem with those. Yes, they're beautiful. But most of the time, the features will go unused and they can deter budget conscious buyers. For example. The former owner to our house had gone through and put in all kinds of luxury appliances, commercial appliances. The problem is like my wife said, you've got this beautiful Wolf stove and I don't know anything about stoves.

[00:11:13] Ralph Estep, Jr.: Wolf's apparently a good brand. But she says to me, Ralph, she goes, think about this. The KitchenAid one we had from Sears. I don't know if Sears even still exists with, the one we had before had a self cleaning. She said you got this one with eight burners on top double ovens, but the thing doesn't even clean itself. And like I said, this former owner had all added all these high end things.

[00:11:32] Ralph Estep, Jr.: Well, he also put in this massive wall of refrigerator and freezers and they were all commercial. Well, we've been in the house now for 10 years and this project was done right before we moved in. Well now, all of a sudden things are starting to break. Listen, over the past year, we've spent $6,000 making this refrigerator and freezer work because here's the deal. It's all built in.

[00:11:54] Ralph Estep, Jr.: It's all part of the kitchen facade. So my wife says, well, why don't we just get rid of these things? I said, that sounds good, but it's probably going to cost 10 times that to renovate the kitchen because we'd have to take walls down or put new cabinets up. So watch out for those luxury appliances. That's a big no-no

[00:12:09] Ralph Estep, Jr.: if you're looking to resell your house. Number eight, garage conversions. And this is what I talked about with Harold. And my dad did this when I was a kid. I remember it was the early eighties and everybody was converting their garages into these you know, they probably call man caves now. And it was beautiful

[00:12:25] Ralph Estep, Jr.: what my dad did. But here's the problem. He got rid of all the parking, he got rid of the storage area and then him and my mom split up as I mentioned on the show before. So my mom ended up keeping the house. Well, fast forward to when I was in high school, she wanted to sell the house. And the problem was she got almost no traction because people who came to look at it in the development, everybody else's house.

[00:12:48] Ralph Estep, Jr.: I say, everybody, but for the most part had garages. A lot of people like to get their car out of the rain or out of the snow. We do get some snow here in Delaware. Or they want to have storage. It cracks me up how many people, and this is sort of a Ralph's rant, but how many people can't even get in their garage because it's stacked from floor to ceiling with stuff they're never going to use. And I guess that's a topic for another show, but watch out for those garage conversions.

[00:13:12] Ralph Estep, Jr.: Number nine is poor do it yourself work. And this is the last on my list. You got to watch out for those do it yourself projects that aren't quite right, because they're going to have a huge impact on the value not to mention you know, some code local, you know, county codes or state ordinances that you have to have certain things.

[00:13:31] Ralph Estep, Jr.: As an example, I'll never forget this. Before we bought the house we're in now, we were out looking and we found this house that had a beautiful, it was immaculate home theater in the basement of this place. And I said to my wife, I said to the realtor, oh, I can see myself sitting here. It's a big comfy recliners and the realtor said Ralph,

[00:13:50] Ralph Estep, Jr.: yes. That's true. But here you got a problem. And I said to her, I said, what's the problem? She goes, this is a finished basement, but there's no egress. What I'm talking about there is at least in this area, I don't know where it is, where you are, but you have to have another way to get out of that basement besides just the one, you know, the traditional steps down to the basement. So it was a great home theater. But the problem is it was completely illegal because they hadn't gotten any permits and it wouldn't pass inspection. So their intention was to build this great home theater room, but they didn't take a look at the compliance issue related to it and to fix it,
[00:14:28] Ralph Estep, Jr.: here's the bottom line. In order to fix it, you'd actually have to go out and excavate the side of the house to put in sort of one of those like a BuiltCold doors or an exterior entrance from the basement up. And you know as well as I do, once you start messing with the foundation, that's a problem.

[00:14:46] Ralph Estep, Jr.: So watch out for those do it yourself projects. Now I promise a little while ago I'll tell you what happened with Harold. And I wish I could tell you it was a great outcome, but it just wasn't. So as I mentioned, Harold got this opportunity to take this transfer and it was a great job opportunity for him.

[00:15:02] Ralph Estep, Jr.: He was moving up in the company. But it meant he had to sell his house. He had no way to commute from where was his across the country, as I can remember. And all the upgrades he did, as the people started coming through looking at the house, they saw them as liabilities. For example, they said that theater room was too specific to him.

[00:15:20] Ralph Estep, Jr.: Yeah. Heroin had made it his own. I'm going to tell you that. He's a Southern guy. He had all kinds of horse and cow stuff designed into the walls. It was very specific. That garage conversion? Now he had a two car garage, but he converted the whole thing into a gym and listen. If you wanted a great at-home gym, that's perfect. But the buyers or the prospective buyers who were looking at this, they wanted a place to park their vehicles. They wanted a place to do storage, and don't even mention that koi pond because that koi pond was viewed as a maintenance burden, a maintenance nightmare. So in the end, unfortunately, Harold ended up losing thousands of dollars even over and above the money he spent on the upgrades. And the other problem is it took months to sell it because people would come in and look at it. Oh, this is a nice place.

[00:16:07] Ralph Estep, Jr.: It was in a good neighborhood. And the whole time Harold's covering two mortgages because he went and did that transfer, moved himself and his family to a new state. And then finally he said to me, he said, Ralph, what I had to do, I finally had to sell it out of desperation because I didn't want to have to cover those two mortgages. So that's what it all comes down to, and it's understanding that money and that home relationship, because it's going to evolve over time. And the thing is, key takeaway here, today's investment and Harold thought he was making a great investment.

[00:16:40] Ralph Estep, Jr.: And a lot of people I talked to think the same thing, but it becomes tomorrow's burden. That koi pond that Harold enjoyed going out there and looking at the koi, swimming around, other people saw it as a burden and a maintenance nightmare. They don't want to be bothered with it. And another key takeaway.

[00:16:57] Ralph Estep, Jr.: You've got to understand wise stewardship and spending wisely. And I go back to something I talk about on this show all the time is consider your needs versus your wants. Now, obviously Harold needed a roof over his head. He needed, you know, walls. I sound silly, but he needed all those things

[00:17:15] Ralph Estep, Jr.: but what his wants overtook that. That want to have that fantastic home theater room. That want to have that koi pond, that one to have that converted garage into a recreational where all your gym at home was great.

[00:17:34] Ralph Estep, Jr.: And it would've been great if he'd have stayed there the rest of his life. So you've got to start having what I call forward thinking decisions. You know, what does this look like if. So think about those things and I'm going to share with you some action steps in a few moments. But here's what I want to ask you to do today.

[00:17:51] Ralph Estep, Jr.: I want to ask you a very simple question. Has this show made a difference in your life?

[00:17:58] Ralph Estep, Jr.: And I'm gonna let you ruminate for a second. Has it made a difference in your life? You know that aha moment. You're listening then something clicks about your finances or your faith. And that's exactly what someone else is searching for right now. So I'm going to ask you to do me a favor. I'm going to ask you to rate the show and here's why your voice matters. Every day, people just like you are looking for guidance.

[00:18:22] Ralph Estep, Jr.: They're scrolling through podcasts. They're scrolling through social media. And they're looking for that lifeline or looking for that person that can give them some biblical wisdom when it relates to their finances. And your story could very well be the nudge they need to transform their financial journey. And your honest review helps them find us in a sea of podcasts.

[00:18:42] Ralph Estep, Jr.: The numbers are staggering, the number of podcasts out there, I belong to a lot of podcast groups and they talk about it all the time is how do you get discovered? Well, one of the key ways to get discovered is word of mouth and also reviews. So something that you could do for me, that will be quick.

[00:19:00] Ralph Estep, Jr.: We'll have a quick impact, but it'll have a lasting difference and it won't take you long. I promise you take 60 seconds. Go to askralphpodcast.com/review and share with the audience your breakthrough moment. It could be something simple as I was listening to Ralph and he explained how to implement the 24 hour rule.

[00:19:20] Ralph Estep, Jr.: So I don't buy things on impulse spending, or he explained how to create a budget or an intentional spending plan, all of those things. And you can help someone else find their path to financial wisdom. Put yourself in their shoes. Because think about the most valuable lesson you've learned from this show. What's that insight you're holding. Truth it's is going to be exactly what another listener needs to hear. So do me a favor, be their sign, be their guide, and do that review for me. At askralphpodcast.com/review. Because listen, we're working on this together.

[00:19:56] Ralph Estep, Jr.: We're building a community where faith and finance work in harmony. And your review is more than feedback. It just is. It's so much bigger than that. It's a beacon for other seeking the same clarity you found. So again, go to askralphpodcast.com/review. Now, let me get to those action steps, because these are things you want to write down and make sure that you're, if you're thinking about home improvements, these are things you want to take into consideration.

[00:20:21] Ralph Estep, Jr.: Number one. Before you make any major upgrades, do me a favor. Do yourself a favor. Research comparable homes in your neighborhood to avoid over improving. You don't want to be the most expensive house on your block because the truth of the matter is realtors will tell you this. They are going to, people are going to look at that and go, yeah, well, I can buy this house three doors down. For half the cost or a hundred thousand dollars less.

[00:20:47] Ralph Estep, Jr.: And what happens is the value of the highest and the value of the lowest kind of meld to this middle point. Well, if you're putting a ton of money in major upgrades, you need to know that ahead of time. Notice, he might say Ralph, I'm going to spend less than my days here. Well, Harold thought that too. But then look what happened. Number two thing. I can't stress this enough when we've worked with realtors before they've said this to me, focus on neutral timeless improvements that appeal to a broad range of buyers.

[00:21:16] Ralph Estep, Jr.: Here's the things that people like. People like open floor plans now. People like functional kitchens. A lot of people spend their time there. People like walk in closets, people like master bedrooms on the first floor of a house. People like an en suite where your restroom or your bathroom, you want to call it is in your master bedroom.

[00:21:37] Ralph Estep, Jr.: Those things are timeless improvements, and that will appeal to a broad range of buyers that koi pond that Harold put in is not a pine to a lot of people. Now, maybe you're a Koi person to me or a Koi enthusiast network. Great for you. But it limits the market. Number three thing. Prioritize functionality over luxury feature.

[00:21:58] Ralph Estep, Jr.: So you think about my situation. The person that owned our
house before, they had this grand scheme of redoing this kitchen and listen, it's a beautiful kitchen. Don't misunderstand me and the appliances are absolutely gorgeous. But they have so many luxury features that just they'd lack that basic functionality.

[00:22:17] Ralph Estep, Jr.: I will never forget it. We were in the house a couple of days and my wife standing in front of this Wolf range and she goes, Ralph, do you know, this thing doesn't have a self-cleaning. And to be honest with you, I kind of understood what she was talking about. But think about that. This, I don't even know what it costs.

[00:22:34] Ralph Estep, Jr.: This ridiculously priced luxury appliance doesn't even have the basic functionality that people are looking for. And last but not least number four on my list here. Consider getting a professional opinion before making significant changes. So call those realtor friends of yours. Go find out what people like, what people dislike.

[00:22:56] Ralph Estep, Jr.: And before you put your hard-earned money on the block there, find out if it's the right thing to do. Now tomorrow, we're going to be discussing how to create an estate plan with a kingdom impact. I'm going to tell you how to make your estate ripple and grow for generations. So that's what you don't want to miss. And remember this. My passion is to help you achieve financial success.

[00:23:18] Ralph Estep, Jr.: Today's passion is help you to avoid losing your shirt by investing a lot of money in your house if you have to sell it like Harold did. But I want to see you live out your dreams. I want to see you grow in your faith. Because I knew this. Working together, we can master your finances from a Christian perspective.

[00:23:35] Ralph Estep, Jr.: So as I always end the show, stay financially savvy out there and God bless you.

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