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Hello everyone and Welcome to another
episode of Selling Greenville your
favorite real estate podcast here in
Greenville South Carolina I'm your host
Stan McCune your host as always here selling
Greenville realtor here in the upstate
and as I always say you can find all my
contact information in the show notes
should you need to reach me for any
reason and as well if you like this show
Please Subscribe please leave a rating
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please do those things
now today I am taking a little bit of
a risk here my children are du back any
moment now they've been out with
their mother doing different things and
I've got a puppy right here by my
side who I'm currently occupying with a
new chewing thing which at the moment
has her occupied but you might hear some
munching in the background I'm I'm
trying to adjust my mic in a way that
you won't hear that but I don't know
what she's going to do puppies are a bit
of a loose cannon so we'll just have
to see I don't do a lot of heavy editing
to this podcast because I quite frankly
I just don't have time and I'm trying
to squeeze this in here which is why I'm
doing all of this in this little
pocket of time that I have because I
haven't had any time this week to do
it so hopefully you guys can bear
with me if there are some weird noises a
lot of planes taking off as well as you
guys that are longtime listeners know
I'm literally right by the airport so
you'll probably hear some of that in the
background but anyway just bear with
me with the things that you hear this
week a little bit different situation
than normal today's episode is about
improving your house and over improving
your house
now the the concept of over improving
your house might be a new concept to
some of my listers I I don't know some
of you are probably very knowledgeable
about this topic and and some of you
maybe have never thought about it or or
maybe only have limited understanding of
it but we have obviously a lot of
misunderstandings and I find this out
when I talk to people just about
things that they've done to their houses
there's a lot of misunderstanding about
what improving your house actually does
in terms of of adding value your house
and we we've talked about this in the
past I think I had an episode where I
kind of went through specifics of
this I'm I'm bringing this topic back
because I think it's an important one to
consider and I have some some additional
information to to cover relative to this
topic but I keep running into this that
people that have done improvements to
their home don't really fully understand
what those improvements how those
improvements actually impact their home
value and it's not always how you
think to be completely honest and and I
think that there are a lot of different
factors for that I think that one
factor is one cause of this is all these
house flipping shows and magazines
that talk about you know improving
your house all these different things
they make it seem like you always get
back so much more money than you put in
you know I see some of the numbers on
some of these HGTV shows and it's like
kitchen remodel
$30,000 added 60,000 of value and
it's like okay that $30,000 Renault is
Boney that cost way more and then that
it it doubled the value of the house or
the value it was double the value what
they put in probably not possible but
probably not
so there's a lot of misinformation
out there just on the basis of those
shows and and different websites and
different magazines and whatnot and
and it's caused some
confusion and of course everyone knows
someone that flips houses and they just
they think that they understand
Outsiders that have never flipped a
house think that they understand how it
works that it's just you buy a cheap
house you update all these different
things and then you sell it for way way
way more than you bought it and updated
it for and those of us that flip houses
on a regular basis understand that
that's not how it works unfortunately it
just it doesn't quite work that way
and the dirty reality is that when you
look at the averages when you look at
the actual data you actually do not get
back dollar for Dollar on average there
are exceptions but on average you don't
get back dollar for dollar what you put
into your home
improvements now before I go any further
probably some of you are like what that
that doesn't make sense Google it Google
something like best home improvements to
increase value or home improvements to
increase Roi something like that and
you'll see a bunch of different things
come up there honestly one of the
better ones is a top hit by Zillow an
article that they wrote
that actually outlines how the highest
Roi return on investment that you get
for improvements to your house on
average are in the low 90% in other
words 90 cents to the dollar so if you
put in you know
$100 on into your house on a project on
average you do really really well if you
just added $90 of value to the house by
doing that $100
Improvement
now there there is an exception to this
because obviously this doesn't make
sense right because how do flippers make
any money if you always only get if the
highest you do is get 90 cents to the
dollar for improvements that you make to
the house and so here's the
thing there there is something that
those numbers don't take into account
and that is that sometimes improving one
space or improving one part of a house
improves the entire house it doesn't
just improve that one space so for
instance if you have a great house with
a really ugly kitchen improving the
kitchen will improve the entire home
value right so you it's possible that
you could get back more than dollar for
doll what you put into a kitchen in that
instance because it impacts so many
other things taking down walls to to
change the layout that might be the most
common one because you get a house that
just has a terrible layout and you
completely change the layout put in
the work to to change it and to make it
more functional that's an example of
an improvement that very likely is going
to disproportionately improve the value
of of that entire house not just the
walls yes you're making improvements to
the layout but improving the layout
improves the entire way that a
potential buyer use the house but all
that said there is a danger that a lot
of people haven't thought about that we
we I introduced a few minutes ago and
that's the idea of over improving your
home you
can
absolutely over improve
your home now over improving happens in
this way it happens when you do updates
to a home that make it so much nicer
than all the other homes in the area to
the point that nobody will pay the extra
amount for those improvements now I can
give a gazillion examples of this let's
let's give a a big example and then well
let's give a small example and then
let's give a big example a small example
would be over improving like your
granite if you're in a community that
just just has Builder grade granite
countertops and you're like M I don't
want that Builder grade granite
countertop granite countertop I want
the highest end
quartz well yeah that's that's great you
can get rid of all that granite and put
in high-end quartz but the average
person that comes in there they might
like the quarts they might think oh this
is really nice are they going to
pay extra substantially extra for that
house you know you might have spent
$110,000 on the courts are you going to
get back 10 did did you just make your
house $10,000 more valuable than an
identical house that has the Builder
grade granted no you did not you're not
going to get that $10,000 back I'm sorry
people are trust me people are are not
going to go in there and look at that
and be like oh I get it I get the value
of that quartz the this home is worth so
much more because of that there's got to
be more to it than that to to
recapture all of that value as I said
before it's got to really change the
functionality of the house or the
entire appeal of the house in some way
a a clearer a bigger picture or more
dramatic example is not too long ago
I had a fun experience walking through a
very dangerous church that was for sale
in the Judson area of Greenville
now if you know anything about Judson
it's in the path of progress it's over
there by our hospitals here in
Greenville it's very close to
downtown there there's a lot of stuff
that I think is going to happen there in
the future right now the area is it's
just a little bit run down it's in the
path of progress but it just hasn't
gotten there
yet and so I looked at this church
building and I was looking at with
buddy of mine Ian we were both thinking
you know is there a play here to maybe
convert this into multif family or do
different things I mean this church was
in rough shape when you know we had
run-ins with black widows and brown
recluses and the walls of the church
were were pulling apart and about to
collapse and Floors were about to
collapse and ceilings were about to
collapse I mean literally everything was
about to collapse
so what's so someone it ended up
actually selling it sold
for like $25,000 something ridiculous
like that which is honestly a fair price
given that the the structure held
pretty much no value it was just the
value of the land so so what if I
bought that and then I I demoed that you
know that shell of a church building and
then went in and built a house that
would normally sell in the Augusta
Circle Elementary area the Augusta
Circle area for like
$800,000 would I be able to get
$800,000 for that same house in the
Judson area and everyone knows no
obviously not location location location
right but here's the thing Not only
would I not get $800,000 I wouldn't get
$700,000 I wouldn't get
$600,000 I probably wouldn't get
$500,000 I might be sitting at like half
of 800 I might be sitting at like
$400,000 because that would be a a nice
house like that would be so much nicer
than all the other houses people aren't
going to be willing to pay the premium
for that house because of how much nicer
it is than all the other houses in the
area and there's a lot of reasons for
that right if if you've got the money to
be able to
afford that nice of a house an $800,000
house you're typically going to want to
go to an area that has other let's just
face it I'm not saying that this is
right this is human nature this is how
gentrification happens you're going to
want to be around other people that can
afford $800,000 houses there I said it
I'm not not justifying it that is just
human nature that's just the way people
are and not just that but you don't want
to to be around other rundown houses
other other homes that don't look as
nice as yours there's just a lot of
factors that's how HOAs come come into
power and how HOAs have so much sway
it's because homeowners they want
everyone else's homes to look just as
nice as theirs and so they form these
HOAs and make them really strict and
give people best law of the month Awards
and all these things to try to motivate
them
the reality is that people want to
they're they're willing to pay a a
premiup to a certain extent
as long as it's conforming to the
neighborhood has to conform to the
neighborhood once you start doing
updates to a home that are way more than
the
neighborhood you start to run into
problems now there is one very
noteworthy exception and that is in a
rapidly gentrifying area right in a
rapidly gentrifying area for instance
you know that area around like Unity
park right now I who knows what's going
to happen in the end around there but I
imagine that there we're going to see
some crazy things real estate wise
happening in that uni Park area parts of
the West end parts of you know Sterling
areas like that that are so close to to
Downtown Greenville those are so rapidly
gentrifying that that you'll see people
throw up you know homes that are way
more expensive than we've ever seen in
some on some of these streets and end up
selling them and making good money
that's the exception it's not the rule
and
particularly when you end up in
production built neighborhoods and and
this is you know we have a ton of these
production built neighborhoods these
these neighborhoods where you know a
single Builder like or SK or
Meritage or Ryan or Dan Ryan or who
knows you know I could rattle off a
bunch more names they just built a
bunch of homes that look very similar
right at the end of the day if you're
in a production built neighborhood where
like all these homes have kind of
Builder grade finishes and you go into a
home we we've used the example of like
upgrading the granite okay that's a
minor example but let's say that you put
an incredible luxury pool Oasis in the
backyard like something that you would
find in like a million dooll house right
it cost you like $200,000 to do this
really really nice and you love it
everyone loves it it's really
incredible you know you're the you're
the eye of the entire neighborhood
everyone wants to come over all the time
to be in this pool and and to experience
this Oasis and to you know Grill on your
green egg and and do all these different
things
will that
pool add value to the house absolutely
that pool is going to add some good
value to the house it is not going to
add $200,000 of value to the house if
you paid $2 200,000 to put that in there
it is not going to bring back
$200,000 it simply is not going to
because here's the thing think about
this logically the person that is
looking for a sweet luxury pool Oasis
isn't typically looking for a production
built neighborhood with Builder Gra
everything else the person that is
typically looking for a house with
high-end quartz isn't typically looking
to be in a production built house and so
this is the thing you can pull up all
day homes with luxury pool oases
notice that I I I did the correct plural
of Oasis it's oases I just want to point
that out you could you can pull up a
bunch of of homes that sold with with
luxury pool oases
in custom homes and then try to
compare them to your home in a
production built neighborhood that that
has a luxury Oasis like that and it's
not comparable because Custom Homes do
not compare to production Built Homes
they're treated differently by the
market it is a completely different kind
of buyer for a custom home than for a
production built type of home and and
that's a very important point to
understand that is
that is lost on a lot of people so you
have to be careful particularly if you
are in a production built neighborhood
that is those are the people that are
most at risk of over improving your home
you get the highest end appliances great
you are not going to get dollar for
dooll back for those appliances what you
put into them it is that simple people
that are you know if you're in a home or
the average sale price is
$300,000 and you have an appliance
package that costs you $20,000 you are
absolutely not going to get back $20,000
for that appliance package cuz it's just
not those people that are looking to buy
a $300,000 house they're they don't care
about having a $20,000 appliance package
like that's going to be an added bonus
but they're not going to buy your house
they're not going to pay a premifor
that they're just looking for a $300,000
house that has 1,800 square feet three
bedrooms two and a half baths and a
bonus room you know that's just the
reality of the
situation
um
but but let's say
hypothetically that you you did these
different improvements the luxury pool
and the and the high-end appliance
package and all of this in the
production built neighborhood and you
just happened to find a buyer that
actually wants to be in one of these
middle- of the road Suburban
neighborhoods and have all of these
updates and a appreciates the value and
says you know what you put
$250,000 into into this $300,000 home
I'm going to give you $550,000 for this
home there's never been a home in this
neighborhood that sold for more than 350
but I'm going to give you $550 because I
see that you put all that money into it
and so you go under contract and then
you get an appraisal done and oh boy you
guys know my opinion on
appraisers I do not have a great opinion
on our appraisers in in this area
however
however I I have to side with them a bit
on how they would handle some of this
okay
so if
you talk to and I'm sorry you can hear
my phone going off here let me turn that
off I always turn my volume off and I
just forgot to this time because I'm I'm
so distracted with my puppy gnawing on
stuff and waiting for my kids to barge
in any moment
here I talked to an appraiser let's just
cut to the chase I talked to an
appraiser friend of mine and just POS
this question to him what happens in the
situation where you do a dramatic over
Improvement to your
home and here is what he said now we
were talking about a dramatic over
Improvement at putting on an kind of
more like that luxury pool Oasis type of
idea not not necessarily the granite and
all of that that we talked about so
there are levels to this the more more
extreme you get with your over
Improvement the worse in terms of of
your return on investment your Roi
the more basic then the more likely
you are and and you'll notice that if
you if you follow what I said and you
Google the the value ads for these
Home Improvements like I said before
you'll notice that that you know
upgrading your garage door for instance
is is one of the best Roi improvements
well that is B the most boring thing
you could possibly do but that's one of
those things that gets you back close
to dollar for dollar what you put into
it anyway I posed this question to the
appraiser we were talking about an
extreme over Improvement what would that
appraise for how would an appraiser look
at it and he said that generally
speaking an appraiser would give that
Improvement about 30 to 40% of its cost
in value you back to the house in other
words if that Improvement cost
$100,000 it would add about3 to
$40,000 in value to the house not good
not good and again you have to think
about this is that Improvement
dramatically altering the use of the
house or is it simply a nice to have
that's that is a a crucial dis
distinguishing aspect here if it's just
a nice to have it's not going to add as
much value to the
market and also to an appraiser if it
actually completely changes the
utility of the house then at that point
the appraiser is going to factor factor
it in more the market is going to factor
it in more in terms of how they consider
it improving the the value of the house
and so I actually agree with the
appraisers on this I agree that
generally speaking buyers are going to
look at these major over improvements
and they're going to
conclude it's not worth that I I'm not
going to pay in a neighborhood that
frequently sells for 350,000 I'm not
going to pay 550,000 just because they
have this incredible
backyard that's just the reality of the
situation now all of that to say I want
to end with this
money is not everything it's not and I
and I think the last time we had this
conversation I I said something very
similarly money isn't the only return
on investment that you get when you're
improving your home sometimes you over
improve a house because you want to you
want to and you don't care about what
it's going to be worth in the end you
just want that Improvement
and remember very very few things impact
your lifestyle more than your house your
house impacts so many aspects of your
lifestyle I did an entire podcast on
this called your house is your lifestyle
it impacts so many different things and
if you can upgrade your lifestyle by
upgrading your house you might be able
to completely
upgrade your life in so many different
ways oh there we go now now you can
definitely hear my dog just in the
background just chewing away on some
food but you can
upgrade your entire life your entire
lifestyle sometimes by doing an upgrade
to your
house and there's nothing wrong with
that you might not get dollar for dooll
return on investment from a money
standpoint but how much of a return on
your investment are you getting from the
standpoint of how you enjoy your life
how when you wake up and you look at
that nice kitchen it just brings a tear
in your ey you just love the kitchen you
love the functionality you love the new
floor plan you love the hardwoods you
you love you know the wet bar whatever
it is you love the the new color of the
siding you it doesn't always matter
dollar for dooll what you get back from
a money standpoint because you may get
disproportionately high Roi from a
lifestyle and enjoyment of Life
standpoint
and I want to leave you guys with that
that is something that I think is a very
valuable part of this discussion as
well at the same time a lot of my
listeners are very cost conscious and I
think that's great I do think that you
should take both things into
consideration definitely consider
because your life things might change
you might have you might find that you
have to move sooner than you anticipated
moving and so
maybe you intended to live in this
home for 20 25 years and so you over
improved it and then two years later you
have to move and now you can't get back
the all this money that you put into it
it's good to keep an eye to both things
that's where the balance is keeping an
eye to both the money what your Roi will
ultimately be when you sell and also
keeping an eye and and your mind attuned
to what your what the impact will be to
you maybe it's worth it to spend a few
extra thousand to do this upgrade or
that upgrade because it will just be an
upgrade to you to you and to your life
in general that's it for this week's
episode I appreciate you guys tuning in
if you have any questions or any
comments please go ahead and reach out
to me my contact information is in the
show notes I appreciate you guys
listening rate review subscribe if you
enjoyed this episode if you enjoyed this
show until next time hope you guys stay
safe and have a great rest of the week
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