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2. Making too many upgrades

You might think that if making one or two improvements to your house is good for its market value, then making lots and lots of improvements must be great for its value. But this kind of thinking can backfire for homeowners, because a home’s value is tied to the value of its neighbors. Similar homes within the same neighborhood generally sell within a 20 percent price range of each other — which means adding upgrades that would make your house stand out from the rest of the homes on your block could make it harder to sell. That’s because a buyer does not want to have a house that is already at the top of its potential value, since they are unlikely to see as much increase in value.

That’s not to say you shouldn’t upgrade your house to make it the home you want to live in. But if you put $100,000 worth of upgrades into a house, you can’t expect to get that much out of your home when you sell it, especially if houses on your block are worth $250,000 or less. And if you do spend that kind of money on wanted upgrades, recognize that it could make your home tougher to sell down the road.

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