Protecting your Custom Home Investment
Updated: Feb 9
Building a Custom Home is a dream come true for many people, and often comes after years of thought about what the "perfect" home would look like. It's no secret that everyone likes different things, so in the world of Custom Homes, there are about as many ways to create a dream home, as there are people in the world. No one is like another, if it's truly custom.
With that said, value retention should be a REAL conversation for anyone investing in a Custom. Yes, the ideal is that the owner is building a home for the rest of their life. However, we all know that life happens, and it's just doesn't make good financial sense, to completely disregard resale value, when planning the home of your dreams. If for some reason you should need to sell it, you want to know the investment you've made can be recovered.
Now, we're not saying that if you can't recover your investment in a feature that is a MUST HAVE for you, you shouldn't do it. Simply put, we're saying this: make your investment with your eyes wide open about where your value will be retained, and where it won't. That way, there are no surprises down the road when home value comes into question.
Here's a short list of some typical features that hold their value, and others that don't.
How To Retain Value:
Added Square Footage to Key Areas: Extra room in Kitchens, Bedrooms and Living Areas are always a plus and will be attractive to any buyer looking at your home. Overall square footage plays a big role in establishing value, and putting that extra in the right places really sets a home apart from the rest.
Creature Comforts and Amenities: Multi-Zone Heating, Central Vac, Surround Sound, and Technology features are all attractive options to buyers. Everyone loves extra comfort and ease!
High Quality Materials: Upgrades to high end cabinetry, countertops, flooring, windows, trim, and doors are all finishes that are visible to the eye and when kept in good care, should retain their value.
Heated Floors and Driveways: Ease and Comfort will always sell, and as long as systems are kept in good working order, these upgrades should hold their value over time.
Large Windows and Lots of Light: Buyers love natural light - I mean, who doesn't? Many buyers are also aware of the value of energy efficient window options and why they're becoming so popular.
High Efficiency Options: Energy efficient options that save buyers money will generally help the home's value, especially when they have a significant impact on actual utility costs.
CC&Rs: I know, there are a LOT of people that do not like these, but keep an open mind because their purpose does protect you. CC&Rs establish acceptable uses of the property, and often tie to architectural standards that you'll have to meet in order to build. What that means is that everyone around you that is under the same restrictions, has to comply in the same ways. This protects your investment, because it protects the level of build of comparable homes that will be used to establish the value of your home.
What Won't Hold Value:
Pools and Hot Tubs: Pools and Hot Tubs may be attractive to some buyers, but they are seen as unwanted maintenance items to just as many buyers. In the Inland Northwest and our seasonal climate, many buyers see pools and hot tubs as burdensome and won't consider homes that have them. Wiring for a hot tub can be a plus, but the unit itself is often worn down by the time the home resales.
Unique or Niche Design Options: If you have a very unique taste, by all means, design it how you want it! However, know that if you try to sell, the more unique the home, sometimes the longer it takes to find a buyer who is keen on the design. If your paint color scheme is extremely unique, you may just need to know that at resale, re-painting to neutral tones is a smart idea.
Safe Rooms: This is a feature that people tend to feel strongly about, and I say if it is important to you, do it. When looking at return on your investment though, it's important to know that you will almost certainly spend far more having it built into the home, than the value it will ever make up at resale.
Elaborate Landscaping or Outdoor Features: While these are beautiful, and some buyers may love them, others will only see work, or something they want to remove altogether. As far as appraisal goes, there is little value added for these types of features - certainly not enough to truly recover the investment made.
Being the Most Expensive Home in the Neighborhood: When it comes to establishing value, comparable sales are the most commonly used basis for analysis. That means that the value of the homes surrounding yours are incredibly important in determining what yours will be worth in the market. If your home is surrounded by homes that are not close to the value you intend to have in the home, your value will certainly be impacted and you may struggle to retain what you've invested in the build.