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.
