Many homeowners make highly specific modifications to their homes and are surprised to learn that it didn’t increase the value of their property as much as they had anticipated. While the addition adds significant value to you, most buyers have different needs than you; the more specific an upgrade is, the harder it is to justify increasing the asking price. Put differently, if you are seeking to ask for more based on the custom tennis court you built in your backyard, the pool of buyers you are marketing to is necessarily going to shrink to buyers who place a premium on being able to play tennis at home. During the last year, where most people were stuck at home, many luxury homes saw highly specific additions designed to improve quality of life for the owner. To be fair, this is only an issue in the luxury market, but it is a significant issue.
Of course, you’re not out-of-luck if you made a highly specific upgrade to your home. In order to sell your property for a premium however, you will have to market your home to a smaller pool of potential buyers or find a way to make the upgrade appealing to a larger swath of the buying public.
Another risk is that the cost of the highly specific upgrade won’t be reflected in the appraisal, which is generally based on comparable sales in the area (“Comps”). If the appraiser can’t find other properties nearby with a similar amenity, they may only add a fraction of its cost to the home’s value. Thus, highly specific upgrades are really only worthwhile if you plan on living at that location for a long time. Otherwise, it may create more problems than it’s worth.
At the Chernov Team we understand that knowledge is power, and knowledge of how highly specific upgrades impact your prospects of sale in the luxury housing market is powerful knowledge indeed. At the Chernov Team we know that whoever comes to the table most prepared leaves with the most, and the Chernov Team always leaves the table with the most.