How Much is a $5000 Fence Worth?
Yes, you read that right. A $5000 fence is very unlikely to be worth $5000.
Fence Cost does not equal Fence Value
Most home improvement projects don’t return 100% on the investment.
Maybe one would if you did all of the work yourself, and used materials left over from another job, but that is not often what happens.
After a homeowner spends money on an improvement, they hope, or really really hope, that the cost of the improvement, i.e. the value of the fabulous thing they installed, is actually the same as or more than the cost of the improvement.
Let’s talk about a theoretical home improvement situation. If you were appraising (as an appraiser), or listing for sale (as an agent), or buying a home (as a buyer) with a brand new $5000 fence, would you consider the fence to be worth $5000?
I would say probably not.
You might think it was worth something, but in part that depends on what the fence replaced – an old rotting one that was the neighborhood eyesore? A brand new cedar fence with a custom gate, installed by the developer as an upgrade for clients that couldn’t close? Did it enclose only part of the yard and block the greenbelt view enjoyed by other homeowners? What is that fence value, to you?
We call this a running joke because most of us fall prey to this, in our own home improvements. We upgrade from a serviceable thing to a fancier thing and really really hope that when we go to sell, the buyers, and the real estate agent and the appraiser will value it as much as we do.
In real life, that is almost never the case.
So, if you really want that $5000 fence, put it in because you LOVE it, not because you think you’ll get your money back. And please, don’t hassle the real estate agent that tells you it doesn’t make your $135,000 house worth $140,000, and don’t give the appraiser a hard time, either.
Both of those professionals have to rely on what the market will pay for an improvement of the kind you put in, and if the market doesn’t value it, it doesn’t really matter what it cost.
Ryan Lundquist says
That’s quite a picture you have there. You’d think that fence was worth at least $5,000. 🙂
Tom Horn says
This is one of the most difficult things to explain to folks. If I were in their position and did not know what I know as an appraiser I am sure I would probably feel the same way. We don’t make the value though, we report it. This is a good argument for getting an inspection to find out the value of future improvements. This may be overkill for a fence, but for something larger like a pool or gross living area addition it’s the way to go.
Bill Cobb says
Hi Alison and Orlando,
Excellent article and points made. I wish all the locals in your market could see this article. I can’t tell you how many times I’ve arrived at a home only to find situations just like you’re described here. My experience in trying to interpret the “market’s” reaction to such improvements as fences, pools, workshops, landscaping, sprinkler systems, backup generators, solar panels, geo-thermal heat/air systems, etc.. is that the market certainly doesn’t pay dollar-for-dollar and might pay 1/4 to 1/3 of initial investment…..MAYBE! For $8,000 to $12,000 gas back up genetors in my market, they don’t pay much extra at all. BUT, the RE Agents say that it sure helps sell the home. It’s not that appraiser that determines the value of that $5,000 fence, but the market. And, it’s not always easy as an appraiser to determine the market’s reaction either. Enjoyed reading your article and absolutely look forward to visiting your site often! Bill
Alison Shuman Masis says
@Ryan – isn’t that fence a hoot? We almost got rear ended when we saw it and slammed on the brakes. Ironically, as ugly and odd as it is, it is stuff like that fence that gives that neighborhood character and draws people in!
@Tom – sounds like you’ve had a few rounds of the same conversation about what something is worth!
@Bill – thanks for re-posting this on FB! You make a good point – sometimes things that don’t get you your $$$$ back might still help your home sell faster which ultimately saves on carrying costs if the home is empty, for example.
Sheilah Anderson says
It made me laugh for a minute. 🙂 Sounds funny but you are absolutely right. I truly agree that most of the home improvement projects don’t return a 100% on the investment. But nice advice, “put it in because you LOVE it, not because you think you’ll get your money back.” I’ll think of this one the next time I will have a home renovation. Cheers!