When to Skip Home Improvements
In general, I applaud homeowners who want to make improvements to their homes and property. See, “Let’s Hear it For Granny Flats!”
However, at least when it comes time to sell, there’s one scenario where owners are better advised to save their cash, and simply market their home to builders: the home is dated and functionally obsolete (one hall bath, small room sizes, poor floor plan, etc.); there’s deferred maintenance; and the house is on a piece of land and in a neighborhood that supports new construction (usually the biggest obstacle to a home qualifying as a tear-down).
No Man’s Buyer’s Land (or, “Stuck in the Middle”)
When all of the above criteria are satisfied, putting money into the home is actually counter-productive.
That’s because $100k (or more!) for a new Kitchen, updated Baths and/or new windows, mechanicals, etc. likely isn’t enough to correct the home’s limitations — and therefore attract an owner-occupant at a good price.
Meanwhile, those same expenditures will raise the home’s price enough to make new construction unattractive, and drive away builders.
See also, “Tear-Down Economics“; “Tear-Down Prototypes“; “Tear-Down Economics, Circa 2012”; and “You Know It’s a Tear-Down When . . .”