Sign up for Hawaii home remodeling tips

What Improvements Affect Home Values Most?

Want to increase the value of your home? Start with making improvements to your kitchen.
Want to increase the value of your home? Start with making improvements to your kitchen.
By Lisa Scontras

If you’re thinking about making home improvements or getting your property ready to put on the market, chances are you’re wondering about the return on your investment and the overall value of your property. What improvements are most effective in drawing buyer interest? And what is the single best improvement you can make to your home to increase its value?

For answers, we talked to Aaron Young, Vice President and Chief Appraiser at First Hawaiian Bank.

The appraisal process when evaluating a home’s value is simple. The appraiser starts with comparable properties in the neighborhood — the most competitive recent sales — and makes adjustments up or down, to derive market value.

For example, if the subject property has a swimming pool and a comparable home that recently sold did not, that might be an adjustment up. If the kitchen is remodeled, that’s going to be another positive adjustment. Ideally, comparable properties have similar features, but the adjustments assign a value to improvements that either home may have.

According to Young, three things affect a home’s value the most: Location, condition and upgrades.

Water or ocean frontage may increase property value, as does the neighborhood and proximity to good schools or to downtown. Likewise, the condition of the home will have an effect on value — the newer the home, the better the physical condition, the higher the value. Finally, a home that has been improved with upgrades can attract buyers who might have otherwise passed it by.

Young adds, “The single best improvement you can make on your home to increase its value is the kitchen.” Other worthwhile improvements that may add value include adding square footage to the home, or increasing the number of bedrooms or bathrooms.

“What affects value positively are improvements to the kitchen and baths, and homes with good flow or design,” says Young. “This is where a seller is going to get the most bang for the buck. On the negative side, things like poor physical condition, deferred maintenance, and outdated features can decrease the value.”

Because different neighborhoods attract different demographics, what is appealing and valuable in one neighborhood may not be considered as valuable in another part of the island — what appeals to younger families, may or may not appeal to seniors or empty nesters. Air conditioning may be necessary in some parts of the island, where in others, not so much.

“For example, a swimming pool in one neighborhood may be more valuable to that particular market segment than to another,” states Young.

A common misconception occurs with regard to over-improving a home. Over-improvements typically mean that the owner cannot recoup the money spent on the home,” says Young. “For example, the cost of a swimming pool constructed in one neighborhood may not be recaptured entirely, as it might in another neighborhood.”

“And remember, when you are talking about improvements made to a home, the quality of workmanship of the upgrades is important to note. If the workmanship is shoddy, what was intended to increase the home’s value could have the opposite effect. An upgraded kitchen wherein the quality of the workmanship is not market standard, can negate the increase in value and may even devalue the property,” notes Young.

It’s also essential to ensure all the major components of your home are in good working order before putting it on the market — this includes electrical, plumbing and roofing as well as landscaping.

If you’re thinking of upgrading your home, consider talking with your real estate professional for information about return on investment in your neighborhood. Financially, it may pay off to channel some of your home’s equity to make improvements. Check with a personal banker at First Hawaiian Bank for assistance with home equity loans and lines of credit to finance your improvements and upgrades.

Open House Guide
Mortgage Rates