So you want to make improvements to your beautiful home? Do you want to update, add on or just make some changes? To improve or not to improve seems to be a lingering question among homeowners.

I often love to make changes or improvements to our home when I look at a decorating magazine, watch a “how to” home improvement show, or just because. My husband will come home and find me gluing paper bags to the wall and say, “Okay, where did you get that idea?”

How do we know that the amount we spend on our home improvement will add to the value of our home? Or is it even important that our improvements add value to our home? I am frequently asked which home improvements add the most value to a home or even if an improvement will add any value at all. The answers I give may surprise you!

Personal Value Improvements

First, there may be some home improvements that can be made to a home that most likely will add little or no value to the home. Why would anyone add an improvement that adds no additional value? Simple, because they truly want that improvement for their enjoyment, and they fully understand and accept that the improvement cost may not be recovered.

One good example… my husband is a huge fan of astrophotography. He has captured some amazing photos of planets, galaxies and nebulas from our backyard. Photos he has taken of the craters of the Moon continue to amaze me!

He would absolutely love to add a towering 20-foot tall observatory to our home. The observatory would look like a tower attached to our home and would house his telescope and photography equipment at a cost of just over $18,000.

We need to consider how much enjoyment my husband would get from the observatory addition to our home. He eagerly tells me at least $18,000! Seeing how much he loves astrophotography and the enjoyment he and our friends get from his photos, he is most likely right. So how much more will our home be worth to future homebuyers after an observatory addition?

Recovery Value

Let’s look at determining a home improvement’s resale or recovery value. I’ve given you the observatory improvement to ponder. Here are a few more examples to think about. Let’s say I want to install stone pavers over my existing concrete driveway.

I love the individual stone paver look and there are some neat patterns that can be utilized. The stone pavers will cost me $7,500 to have installed. I also want to add a covered 10 x 20 screened-in porch to my home. The estimated cost of the screened-in porch is about $10,000. Which of the improvements will add the most value and which improvements will add little or no value?

Real estate appraisers use complicated methods of analyzing recent home sales and extracting improvements to determine their estimated contribution to value. However, homeowners can use a very simplified method of comparative analysis to help determine if that home improvement you are considering may or may not add value to your home.

How to Calculate?

To start, simply pretend you are a home buyer looking at two identical homes for sale. Imagine that Home A and Home B are identical homes on identical lots.

Example 1: Observatory

Home A is a nice home and lot with no observatory. Home B is a nice home and lot with an added observatory.

How much more would you offer to pay for the home with the added observatory?

Unless you are into astronomy, most likely you and most other buyers would not pay additional money for Home B with the observatory. However, an astronomer might pay the full $18,000 cost for the observatory.

The key in determining the most accurate estimated value of the observatory is to consider the added value the majority of your market buyers would give.

Example 2: Concrete Paver Driveway

In this example, Home A is a nice home and lot with a solid concrete driveway. Home B is a nice home and lot with a concrete paver driveway. How much more would you offer to pay for the decorative stone paver driveway, or do you prefer a solid concrete driveway? Both driveways function as a hard surface driveway.

This comparison is not quite as simple as the conservatory addition. In this case, some folks may prefer a solid surface concrete driveway, and some may prefer a stone paver driveway. Both have their pluses and minuses.

As a potential buyer, how much more would you offer for the stone paver driveway, if any? Would you offer only $2,000 to $3,000 more for the stone paver driveway? If so, then your offer of value indicates the stone paver improvement may only add an estimated $2,000 to $3,000 to the value instead of the $7,500 cost.

Remember, you are only one buyer’s opinion, so the more opinions you can garner from others, the better your chance to get a fair average.

Example 3: Screened-in Porch

What about my covered screened-in porch improvement? Seems simple! Who wouldn’t want a screened-in porch added to their home, and of course it should add full replacement cost to the value! Let’s again look at our Houses A and B.

Pretend House A has no covered screened-in porch and House B has a nice 10 x 20 covered screened-in porch. Most everyone would pay extra money for a 10 x 20 screened-in porch, right? How much extra? It depends on a buyer’s wants and something else I want you to consider is location!

I personally love outdoor spaces, so I am quick to say that I would offer at least the $10,000 replacement cost extra for House B’s new porch. But, consider this, I might only offer $3,000 to $4,000 more for House B with the new covered screened-in porch if the porch location has an unsightly view of a parking lot or trash collection bin.

As you can see, not all 10 x 20 covered screened-in porches will add the same value to every home. The estimated values that we gather by comparing identical homes is useful in helping to determine what we can expect from improving or adding on to our homes. You can use this analysis for kitchen or bath improvements or most anything you may be considering.

Start thinking about that next home add-on or improvement and gather opinions of value from others. You might be surprised that the new kitchen farm sink you’ve been wanting is not really a big deal to other buyers or on the other hand, you may find that it adds more value than you imagined!

What was the latest home improvement you made? Do you think the sum you paid for it will add more value to your home? Was there an improvement you considered making, but reconsidered upon more thoughtful reflection?