MONEY home improvement

5 Home Upgrades That Just Aren’t Worth It

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Nick David—Getty Images You might be able to recoup the cost of a kitchen backsplash, but the specific type of tile won't matter as much to buyers.

You may love your new pool, sunroom or kitchen tile, but none are likely to drastically increase your home’s overall value.

Myth: All upgrades will add value to your home.

Fact: You may never recoup the full cost of some home upgrades.

If you’re hoping to increase your home’s value (above and beyond the cost of an upgrade itself), you should know that some updates that are valuable to you may not be valuable to potential buyers.

Here are five of the most common upgrades that cause homeowners to lose money.

1. Putting in a pool

Pools can be hit-or-miss when it comes to added value. You may see some return, but often it’s not enough to pay for the pool itself.

In fact, adding a pool to your home could be a major turnoff to some buyers. Buyers with small children may be concerned about safety risks, those looking for a low-maintenance yard won’t want to deal with the hassle and upkeep of cleaning a pool, and buyers who are on a tight budget may not have the extra cash to deal with the added expense.

If you live in a warm-weather climate where people are inclined to use a pool year-round, you’re more likely to get a favorable response from buyers.

If you’re looking to add a pool, don’t forget that you’ll need to operate and maintain the pool yourself, and this comes with a sizable extra cost. Your likelihood of recouping the money you spent on maintenance, in addition to the installation costs, is pretty low.

2. Highly custom design decisions

Your idea of a dream kitchen probably isn’t everyone’s idea of a dream kitchen. Unless you plan to stay in your house for many years to come, think twice about renovations that are too personalized.

If you install a kitchen backsplash, you might recoup the cost, because the difference between “no backsplash” and “backsplash” is noticeable. But the specific type of tile might not matter to buyers. Similarly, choosing a beveled countertop edge that’s complex and ornate, rather than a basic beveled edge, can turn off buyers whose tastes don’t align with yours.

In fact, these custom features may wind up costing you come listing time, as many buyers will factor in the money they’ll need to spend to change the house to suit their own tastes. If you’re going to upgrade your kitchen just for the sake of selling, stick with neutral, builder-grade design decisions.

3. Room conversions

Buyers will be looking for certain basic staples when they tour your home: typically, three bedrooms, two bathrooms, and a garage. Getting rid of these expected spaces (or altering them into something unusual) may harm your resale value.

Every bedroom, for instance, is coveted space that can bump your listing up into the next bracket. Buyers are looking for a two-bedroom, three-bedroom, or four-or-more-bedroom home.

You might not need that extra room and dream of knocking down a wall to create a giant walk-in closet. Or perhaps you’d prefer to cover the walls with soundproof foam and convert it into a recording studio.

Unfortunately, most buyers likely won’t share your interests. Instead, they prefer an extra bedroom for children or guests.

4. Incremental square footage gains

Sizable square footage gains — like finishing your dingy basement so it becomes an additional livable floor — can be a boon in buyers’ minds. But tiny, incremental changes may not give you much of a return on your investment. (You may love your new sunroom, but it’s not likely to drastically increase your home’s overall value.)

Adding square footage in a way that doesn’t flow well with the floor plan can also backfire. Sure, a half bath on the first floor would be useful, but if buyers have to pass through the kitchen to get to it, the half bath loses some of its appeal.

5. Overimproving

No one wants to buy a megamansion on a block full of split-levels. When your upgrades feel overboard for your neighborhood, you alienate buyers on two fronts: buyers who are drawn to your neighborhood won’t be able to afford your home, and buyers who can afford a home of your caliber will prefer to be in a ritzier area.

Keep the “base level” of your neighborhood in mind. Tour some open houses on your block to see how your neighbors’ kitchens look before you invest a small fortune in granite countertops and high-end fixtures. Being a little nicer than the other houses around you can be a selling point, but being vastly more luxurious is not.

Pursue these upgrades for your own enjoyment — but don’t trick yourself into believing you’ll more than recoup the cost of the improvement in the form of additional home value. You can always opt for the projects that have the best potential to draw in a buyer instead!

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MONEY

America’s Total Net Worth Just Hit a Record High

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PM Images—Getty Images

But that doesn't mean the average American is growing wealthier.

U.S. households saw their total net worth rise to a record level of $84.9 trillion in the first quarter of this year, the Federal Reserve reported Thursday. That’s compared to $80.3 trillion a year ago.

But this raw figure—which includes all assets including homes and stocks, minus debts—doesn’t tell you much about how the average American is doing.

It doesn’t account for inflation, or for the way wealth is distributed among different households.

Other data have been showing that most people in the U.S. have actually seen both their income and net worth decline, in inflation adjusted terms, in recent years. Gains have been concentrated among the wealthiest Americans.

In fact, the wealth gap between the rich and the merely middle-class is at a 30-year high, according to a recent Pew study. And once you account for the fact that most people have their net worth tied up in their homes, it becomes clearer why many Americans don’t have enough money for retirement.

Still, a more meaningful measure in the number released by the Fed today shows that there is promise for the economy. The ratio of household net worth to personal disposable income has risen to 639% from 629% a year ago, signaling that—at least in the aggregate—people might soon be ready to start spending more.

MONEY buying a home

3 Tips for Buying a Vacation Home

Photograph by Gregory Reid; Prop styling by Megumi Emoto

1.1 million vacation homes sold in 2014. Here's how to find a hideaway of your very own.

Second–home sales leaped 57% last year, according to the National Association of Realtors. Why? A strong stock market and an influx of baby boomers buying vacation homes for retirement have helped, as well as still-depressed prices in some second-home markets. That said, Lawrence Yun, the NAR’s chief economist, expects prices–and sales–to rise in 2015.

Are you looking? Consider these buying tips:

Search for bargains. Nearly half of all vacation homes purchased last year were foreclosures or short sales. While that puts the number of distressed properties at an eight-year low, some vacation markets still have a hefty backlog, according to Realty Trac. Among them: Miami, Ocala, and Winter Haven, Fla.

Rent your place. If you hope to generate some cash, think about buying where rental demand is strong. Coastal North Carolina, Telluride, Colo., and around California’s Lake Tahoe and Bass Lake are very hot now, according to HomeAway. Just remember: If you rent for more than 14 days, the income is taxed, though you can deduct mortgage interest and other expenses.

Learn the market. Visit several times—and in different seasons. One vacation doesn’t make you an expert.

MONEY

Shark Tank’s Daymond John Blew His First $20 Million Before Wising Up About Money

The Shark-Daymond John Presents "Xpensive Habits" Lavo Brunch Sponsored By: Jack Daniels, Miller Lite & Evian Water
Jerritt Clark—WireImage Mark Cuban and Daymond John attends The Shark-Daymond John Presents "Xpensive Habits" Lavo Brunch Sponsored By: Jack Daniels, Miller Lite & Evian Water at Lavo on February 14, 2015 in New York City.

The FUBU founder shares what he's learned about investing since then.

On ABC’s “Shark Tank,” Daymond John scrutinizes the business plans of wannabe entrepreneurs, but how does he manage his own finances?

A self-made businessman, John is actually pretty realistic – working his way up many ladders and learning from failures. A native of Queens, New York, John founded FUBU at age 23 in 1992, riding the wave of hip-hop fashion trends.

Now 46, he has been with “Shark Tank” since its debut in 2009. He serves as a consultant, gives motivational speeches, writes books and is a spokesman for other businesses, such as Gillette.

Reuters spoke with John about how his acumen for business translates to managing his own money:

Q: How much of your net worth is locked away for the future, and how much is at your disposal now?

A: I’ve probably put in 50 percent for long-term, and the rest I play with. I have squirreled away enough to not have to worry about it. Hopefully, I’ll never have to touch it, and it will be passed onto my kids or a great organization.

What I play with now, it can fluctuate. I can end up using a good percentage of it on a great acquisition, or I can hold it.

Q: How involved are you in the management of that money?

A: There are several levels of it. I’m involved when I’m doing my day-trading. When we’re talking about asset allocation, I have very different approaches. I’m with Goldman (Sachs) and various other firms. I kind of let three out of five of them do their own thing. For two out of five, I monitor (my account) over the course of every month or so.

Q: Most of what you do on ‘Shark Tank’ can be considered alternate investments, but do you do anything beyond that to diversify your portfolio?

A: My larger investments have been apparel brands. As for real estate, I’m part of a fund, but I’ve never been that great at real estate.

Q: When you do a promotion like for Gillette’s Shave Club, do you have an investment in that, or is it just for promotion?

A: It’s a brand association. It’s just an investment of my time and my face and my integrity. I don’t take it lightly.

Q: You lend your name to a lot of causes as well. How do you decide what charities get your time and money?

A: It’s not really a planned thing. I try to give on various platforms, and not do too much check-book philanthropy. For some, I will try to make more people aware of the plight, and help get more people to give. To some I will dedicate time, such as my desire to get out word about dyslexia.

Q: Do you have planned giving worked into your estate plan?

A: I don’t have that formal plan – some will go to family and certain small organizations. One is animal related, one is dyslexia, one is hip-hop against violence.

Q: Who first taught you about finance and money management?

A: I got the knowledge by blowing about $20 to $30 million the first time I made it. I’m not one of the few who hit lotto or peaked at 25 as an athlete. I have had several other bites at the apple.

Q: You have listed Robert Kiyosaki’s “Rich Dad, Poor Dad” as one of your favorite books. What have you learned from it?

A: The fundamental lesson to it is it’s not how much you make, it’s how much you save. You should go after small opportunities that have the potential to grow into large opportunities. That educated me on the tool of money.

MONEY real estate

The Surprising Way to Snag a House in a Bidding War

couple taking keys to house
Getty Images

Bidding wars are back. Here's how to win.

Homes are selling faster, and getting more multiple offers and bids above the asking price than just before the financial crises, new research shows. Yet with the typical home still selling for less than it did in 2006, it is difficult to call this a bubble.

Some 28% of homes this year and last year sold within two weeks of being put on the market, up from just 19% pre-recession, according to a survey from Coldwell Banker Real Estate. Meanwhile, 47% of recent home sales saw multiple offers, vs. 42% pre-recession; and 27% got offers above the asking price, vs. 25% preceding the recession.

This data, however, may be somewhat misleading. For starters, the median home nationally sold for $219,400 in April, up 9% from the year earlier and a robust 42% from the market bottom in 2011-2012. But that remains shy of the $230,400 median price reached in July 2006, and after the sharp bounce back price gains now seem to be leveling off, says Budge Huskey, CEO of Coldwell Banker Real Estate.

And most of the heated activity is taking place in desirable neighborhoods, where obstacles to new construction put a premium on existing homes. The bidding wars generally are occurring on move-in-ready homes that are priced to sell. “The vast majority of markets around the country reflect more balanced inventories and rates of appreciation which have decelerated from the pace of the last two years,” Huskey says.

Still, in many ways this is a seller’s market, fueled in part by rising interest rates. Mortgage rates remain low at just above 4% for a 30-year fixed rate. But the trend has been up since January, and many expect rates to continue climbing. That brings in buyers from the sidelines that want to act before the cost of money goes higher.

Even if sellers fail to entice an offer above the asking price, they may take advantage of the conditions and be exceptionally choosey about a buyer. Just 46% of sellers take the first offer they get, down from 59% during the recession, the survey shows. A record 36% of sellers since 2013 say they chose a buyer based on emotion in addition to their ability to pay—up from 19% pre-recession.

Keep that in mind if you are buying. A downsizing baby boomer may not get the price they had counted on before the recession. But they may want to be sure the house where they raised their kids goes to a family they like. “It’s increasingly common for buyers in competitive situations to provide extensive information on why they would prove the perfect owners and neighbors,” Huskey says.

 

TIME Millennials

Millennials Can’t Afford to Buy a Home in These Cities

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Chris Windsor—Getty Images

California has the three least affordable cities for millennials looking to buy homes

Millennials are often the most sought-after demographic, whether by retailers or news organizations. But when it comes to real estate, the young generation is getting squeezed out of some cities.

The nasty combination of rising residential real estate prices and slow wage growth is making it difficult for a lot of millennials to afford buying a home in some areas — especially in California.

According to Bloomberg, the five U.S. cities with the highest “home affordability gaps” can all be found in the Golden State, led by San Jose, where the median annual salary for millennials falls more than $80,000 short of the minimum required to purchase a home in the city. San Jose is followed by San Francisco, where the home affordability gaps is roughly $60,000.

Los Angeles, San Diego, and Sacramento round out Bloomberg’s top five of the least affordable cities for millennials looking to buy a home, while Riverside comes in at eighth on the list to give California six cities in the top 13.

Somewhat surprisingly, New York places only sixth on the list, with a home affordability gap of $6,550, although Bloomberg notes that the statistics used to come up with that figure incorporate housing prices from areas far outside of pricey Manhattan:

Almost 80 percent of New York’s millennials reside in three counties: New York County, Queens County and Kings County, where Manhattan, Queens and Brooklyn respectively are located. Using the average median home value for those three boroughs ($749,596) and the 2015 estimated earnings for millennials living there ($49,193), the affordability gap comes out to a whopping $52,262.

MONEY Buying a House

House Bidding War Won With Promise of Free Pizza

Free pizza? Now that's how you sweeten up an offer.

In a bidding war for a house, the highest bidder doesn’t always win. Bids are often accompanied by letters intended to sway the seller, and some real estate agents swear there’s an art to writing a heartfelt personal letter about why you’re the right buyer for the home in question. While this tactic might seem cheesy or manipulative, it sometimes does the trick.

In the ultra-hot home market that is Portland, Ore., where homes are selling 15% quicker than they were a year ago and where it’s not unheard of for buyers to offer $100,000 over asking price, a nice letter probably isn’t going to cut it. But in one recent instance, it looks like adding a personal, very unusual touch to the bid for a home pushed the offer over the edge.

As the Oregonian reported, over Memorial Day weekend 23-year-old Johnny Barrett was intrigued with a home in southeast Portland listed for $249,000, but he assumed that there would be a bidding war and the property would sell for far over asking price. Nonetheless, he put in an offer. It was no ordinary offer: At the suggestion of his real estate agent, he sweetened his bid quite literally with a promise of free pizza for life to the seller. Barrett, you see, is part of the family that owns DeNicola’s Italian Restaurant, a local eatery where he works as a cook.

“This is the first offer I’ve written in free pizza,” the agent, Mindy Shierk of A Group Real Estate, said. “We thought, ‘We’ll try, let’s see.'”

The offer enticed the sellers to bite, in more ways than one. Once the sale is final they’ll be indefinitely entitled to one free pizza per month at DeNicola’s. Guess this shouldn’t come as too much of a surprise. Sellers in Portland may have come to expect two or three dozen offers on homes, many of them over asking price. But it’s a safe bet that not too many offers come with free pizza for life.

MONEY Apple

Steve Wozniak’s Apple-Styled Former Home Sells for $3.9 Million

The Apple cofounder's former residence was built by the same contractors that designed Apple's offices.

Ever wonder how Apple’s signature aesthetic might look when applied to a house?

Look no further than Apple cofounder Steve Wozniak’s former home in Los Gatos, Calif., which just sold for $3.9 million. The design is simple and futuristic, with plenty of shiny silver, white, and glass surfaces. Essentially, it looks like a giant Apple device (slash spaceship).

That’s no coincidence, says listing agent Arthur Sharif. The home was originally built in 1986 for Wozniak with the help of the same contractors who built Apple’s offices.

“That’s why it looks slightly more like a commercial rather than residential space,” Sharif says. “I actually had to ‘de-Apple’ it by adding a walnut finish to the floors.”

The 7,500-square-foot, six-bedroom, eight-bathroom home has been listed and delisted several times since 2013 and was finally snatched up by pharmaceutical entrepreneur Mehdi Paborji, according to Sharif. (The Wozniak family sold it for $3.1 million to patent lawyer Randy Tung in 2009.)

Wozniak, who still lives just a few hills over in Los Gatos, built the home with his kids in mind.

In addition to a playroom, pool, and koi pond, the house includes a $40,000 scientifically accurate replica of a prehistoric limestone cave, complete with fossils, dinosaur footprints, stalactites, stalagmites, and semi-precious stones embedded in the walls.

Click through the gallery above to see more images of the home.

MONEY Utilities

Home Solar Energy Gets Jolt from Financing

Solar technology is growing, and financing is making it more accessible for homeowners.

As solar-powered technology becomes more popular, more financing options are being offered to make solar panels more accessible. From the Solar Impulse 2, the solar cell aircraft, to rooftop solar panels for war-torn hospitals in the Gaza Strip, more and more people are making use of the technology in a residential setting.

MONEY real estate

Atlantic Hurricane Season Could Bring High Costs

Prepare your home and finances for a disaster.

Atlantic hurricane season runs from June 1 through November 30. While the 2015 season is expected to bring ‘below average’ activity according to NOAA, that still means six to 11 named storms. Homeowners in geographic areas susceptible to hurricanes should be prepared with homeowners’ and flood insurance. For more information about hurricane-proofing your finances, check out It’s Hurricane Season: 5 Ways to Disaster-Proof Your Finances.

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