Growth Drivers

Upgrade Disappointments: What Really Pays Off When You List

• Mike & Rachael Novak

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Most sellers think value = what they paid + upgrades + emotion.
Wrong. The market doesn’t care what you spent. It cares how your home stacks up. Today we break the myth.

Inside this episode you’ll learn:

  • What buyers actually notice (and what they don’t): quartz vs. marble, 2cm vs. 3cm, custom vs. stock.
  • The neighborhood trap: why over-upgrading for your area burns cash.
  • Timing reality: kitchen/bath remodels often need 3–5 years to return. Two months before the list? Bad bet.
  • The Rule of Three: how to bid contractors so you avoid the “screw-you” price.
  • Comps first, projects second: build to the market, not your feelings.
  • No-brainer refreshers: paint, carpet, flooring—why a $2,100 carpet swap saves you $15,000 on price.
  • Hard stop: don’t convert the garage. You shrink your buyer pool. You don’t raise value.

Agents: use this to coach your sellers with confidence.
Sellers: bring us in before you swing a hammer. We’ll show you what actually moves the number.


Listen. Take notes. Execute. Then list with leverage.


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Rachael Novak:
[0:33] All right. Welcome back to another episode of Growth Drivers Podcast. You've got Mike and
Rachel Novak here. It's been a minute. We took a little bit of time off from this podcast.
Mike Novak:
[0:44] Travel, bodybuilding, lots of life happening.
Rachael Novak:
[0:47] Lots of life happening.
Mike Novak:
[0:48] Trying to build our house.
Rachael Novak:
[0:49] Exactly. Lots of stuff going on, but we are back. And we wanted to start kind of addressing,
we've got an entire list of things to talk about. We wanted to start kind of addressing some more
specific topics, especially in the real estate space. So one of the things that you and I have dealt
with a lot this year are sellers, clients who are doing a lot of home renovations, a lot of cosmetic
updates, a lot of things to their property. And some people bring us in in plenty of time to advise
them on what to do. Some people do things and end up feeling disappointed. So we're going to
kind of talk today about home and property upgrade disappointments and what really pays off when
it comes to this kind of stuff.
Mike Novak:
[1:35] And just to clarify, you know, our audience is really twofold. And this is going to be a relevant
conversation to both of those groups. The first group is agents, right? Like we speak to real estate
agents all the time. They listen to a lot of our content. This will definitely help you in coaching
conversations with your sellers. And then of course we have sellers, buyers, clients listen to this as
well. And this may be directly speaking to you. Right.
Rachael Novak:
[1:56] Exactly.

Mike Novak:
[1:57] And I think before you jump into like what works and what doesn't work, I think it's really
important that we frame the value equation that most sellers think exists that is very broken. And
most sellers think that the price of their home is a formula of their acquisition price, plus what
they've put into it, plus the emotional value that they feel equals what they think they should get.
And that's not how it really works. Unfortunately, because you've put $100,000 into upgrades in
your home does not mean you're going to get the $100,000 back. That's exactly not all upgrades
are created equal. And that's kind of the frame of today's conversation. Right.
Rachael Novak:
[2:38] That's right. Exactly. Like your your market value does not equal what you paid for it, plus the
upgrades you've done to it, plus the appreciation, plus the emotional investments you've made. It
equals whatever the market says right now.
Mike Novak:
[2:51] Right. And we're not saying don't do personalized updates to your house. We're just saying
that from a financial return on investment perspective, something simply won't come back. And
that's okay. You know, like if you're going to be at that home for five or 10 more years, go ahead
and do that pink tile you love that the market's not going to react favorably to. If that sets your heart
on fire, go for it. And there's lots of those types of things like super high end appliances are kind of
another one where people spend like, you know, exorbitant amounts on appliances that they're not
going to get back. Right. So you just have to like look at at that kind of equation.
Rachael Novak:
[3:24] Yes, exactly.
Mike Novak:
[3:25] Because the market doesn't care how much you spent in your home.
Rachael Novak:
[3:27] Right.
Mike Novak:
[3:27] They only care how does your home stack up versus every other house that's in the market.
Rachael Novak:
[3:31] That's exactly right.
Mike Novak:
[3:32] It's the only thing they care about. The market is brutal. It's brutally honest.
Rachael Novak:
[3:36] Thank you for that prerequisite. Because I think that that is an absolutely great frame of
reference to go into this with. And so what we've seen is that people will drop thousands of dollars
into upgrades, thousands of dollars. And then just like you kind of said, they will expect to see that
back, like as if they're going to make that money back in the sale price. And sometimes they do.

And sometimes it's more. Sometimes it's a two to one or four to one ROI. And sometimes it's not
even close. So this is what we want to kind of walk you through, like why this doesn't always work.
So reason number one why this doesn't always work, maybe you've likely been over-upgrading for
the neighborhood. Case in point, we had a couple of Marysville, so if you're in Snohomish County,
you know where Marysville is. It's a family-friendly community, middle of the range of kind of
average price points, a little lower than average price point for the entire county. You can typically
find decent deals on single-family properties. So we had this family that bought this home, and
they'd only been in the home for three years. And they decided to do some upgrades like six
months before contacting us and letting us know that they wanted to sell. They replaced their
Formica countertops with marble countertops. They made a marble inlay right inside the front door
in the entry kind of tile way. And then they also did an entire remodel on the primary bathroom.
Mike Novak:
[4:56] And it was gorgeous, right? It was beautiful.
Rachael Novak:
[4:58] Beautiful marble shower. The price point for that neighborhood was not even close. It was not
justifying marble going in this home. And so what they had done is they had dropped all this money,
literally tens of thousands of dollars into these upgrades that they were absolutely not going to see.
So they were sorely disappointed when we came in and showed them what their actual
neighborhood comps were, what the other homes the neighborhood were selling for. And their
home wasn't magically going to be worth $30,000 more than all of the other ones that were exactly
like it or very similar just because of this marble. So that is a very typical thing that we see is people
using or way over upgrading the property based on the neighborhood that they're in. So that's
number one, why this doesn't work. Number two, kind of coincides with this, is using expensive
materials that buyers don't care about. Buyers don't care.
Mike Novak:
[5:47] What's an example of that?
Rachael Novak:
[5:48] Like the marble countertops.
Mike Novak:
[5:49] Yeah.
Rachael Novak:
[5:50] Buyers really don't care if you use quartz or marble.
Mike Novak:
[5:54] So the difference, like buyers care about the difference between solid surface and Formica.
No question about that. But what they don't give a shit about is some exotic marble. Yes, exactly.
That costs three times as much as general white quartz.
Rachael Novak:
[6:08] Correct.

Mike Novak:
[6:08] Right? The market's not going to pay that back.
Rachael Novak:
[6:10] Or, for instance, even if, you know, when you're picking countertops, you can do like a 2cm,
like a 2cm countertop, or a 3cm countertop of quartz. 3cm is significantly more expensive.
Mike Novak:
[6:22] Mm-hmm.
Rachael Novak:
[6:23] Buyers in some certain price ranges aren't even going to notice. They're not even going to
care. So it's those kinds of little things that can sneak up and you can spend more and make these
expensive material upgrades that absolutely you're not going to see back in the sale price of that
property.
Mike Novak:
[6:37] Connected to the countertop consideration, like kind of part A and part B would be custom
cabinetry too. Like I know like, you know, when we built our Granite Falls home, the cabinets were
like $55,000. They were custom built cabinets. And you can actually get like Home Depot or Lowe's
cabinets that look very similar to that. They still have like dovetail full extension soft closed doors
for like half the price. You know what I mean? So again, like a custom cabinetry upgrade is cool if
that's really important to you, but it's something the market does not care about.
Rachael Novak:
[7:08] Yeah. I mean, and we were building the house for us. We lived in it for half a decade and
loved it. So, yeah, the intention for us wasn't an ROI. It was enjoyment. And that's totally different,
which is totally OK. So another reason that this doesn't always work, and this is really common with
people who don't do a lot of project management or don't do a lot of any sort of construction work
at all, is they don't bid out the labor for the work. The project gets really expensive because all of a
sudden you've got one person that you hire for the job because your buddy said this guy is the best
or he's the cheapest or he'll get the job done. And the next thing you know, you're a month over. It's
taken over a month. The market has shifted. Or you're way over on cost because there's so many
change orders. Now you're way over on your budget because this contractor is taking way too long
and charging way too much.
Mike Novak:
[8:01] Yeah, I call this the rule of three. And I grew up in a building family. So this is like kind of a
phenomenon that a lot of people don't understand. Contractors bid work based on how busy they
are. If they are slamming busy, they give you the screw you bid. That's what I call it, right? I got the
F you bid.
Rachael Novak:
[8:16] Yeah.

Mike Novak:
[8:17] Yeah, I just PG'd that a little bit. But what that bid means is I don't have time to do this work,
but... If you pay me this exorbitant amount of money, I'm going to get it done. And you want to avoid
the screw you bid. And so the way that you do that is you get three bids for anything that would
exceed $5,000 or more on your house. If it's just like a $5 thing, no big deal. But if we're talking like,
hey, all the labor to redo your tile, setting other cabinets, like get three bids. And then also look at
the references too. Because we don't want the cheapest person. We want the best person, right?
And there's kind of like three considerations when you look at contractors. There is the price, there
is the timing, and then there is the skill, right? Exactly. And you can kind of get like two out of those
three. You can't get all three ever. Exactly.
Rachael Novak:
[9:00] Yeah. So very, very important that you're using the rule of three when it comes to contractors
and doing any sort of big projects around the house, no matter what time of year.
Mike Novak:
[9:09] But I just want to emphasize, we're not looking for the cheapest, we're looking for the best.
Rachael Novak:
[9:11] Exactly. Exactly right. And one other reason why this doesn't work, why dropping thousands
into upgrades and expecting to see it on the south coast doesn't work because when you're doing
big area remodels when you're remodeling a kitchen cabinets and countertops or you're
remodeling a bathroom like the main bath or especially the primary bathroom typically those
projects are going to take three to five years to have a return on the investment if you're doing that
right takes time exactly so a complete kitchen and bath studs in remodel which is basically stripping
it down to the drywall or to this studs inside the home, rebuilding it, you know, from the walls in two
months before a listing is not going to net you the same amount or twice the amount that you're
spending on it.
Mike Novak:
[9:56] Right.
Rachael Novak:
[9:57] I had some clients very specifically in Everett who happened to be contractors and And, you
know, they had been working around their house. They bought this cute little rambler with us, like, I
don't know, five years prior, I think. And then about two, three months before they got a hold of me,
they started a kitchen remodel and a bath remodel. And by the time they brought me into it, they
were 60 days, about two months into this project. They wanted to list in the next four weeks. And
they were 40K deep into this project, $40,000 deep. And they did cabinets, they did countertops,
they did new appliances, they did a new shower, they did a new vanity. they did everything. And I
had to break it to them that the value of their property is not going to reflect the $40,000 upgrades
that they have just spent.
Mike Novak:
[10:41] Right. I think when you look at kitchens and bathrooms, like you really need to look at what

the competition listings are going to look like, right? Like, um, I have a Woodinville client right now
and all of the competition homes are super original, right? Like very few of them have been
upgraded in a way that is impactful. Like at this price range, I'm talking like a $200,000 update kind
of thing. You know what I mean? And so it's important to know what are you going against because
you may simply not need to do it if that's not the standard of the competition. And you can kind of
get an idea of what that could or could not do to your bump in price. It may not affect the price at
all. It could have a huge impact on price. But you need to know in that sub market, in that price
range, what does that competition look like? And the only way to do that is to look at the active
comparables.
Rachael Novak:
[11:25] That's exactly right. Right. Which leads me to my next point is what do we do instead? So
instead of all these things that we've said do not work, what do we do instead?
Mike Novak:
[11:32] Well, number one, for sure, get us involved sooner.
Rachael Novak:
[11:35] Like if you are thinking about a remodel for the purpose of having a return on investment and
making your home more valuable, get us involved sooner because we'll be able to tell you, like you
were mentioning, if we should actually upgrade the countertops or if we should actually upgrade
the vanity in the bathroom as opposed to just changing out the mirror and the light fixture, or
instead, maybe just we put some new backsplash in the kitchen instead of replacing the entire
countertops. Get us involved sooner so that we can pull those comps so we can tell you what is
going to be the most effective way to have a good ROI without dropping a ton of money and not
getting that back. That's number one. I had some clients in Bothell a couple of years ago, and very
similarly, their home was overall very original, but it was impeccably cared for. But one of the things
that I noticed about the homes that were selling in their neighborhood was a lot of them had done
like a full kitchen upgrade. So it had just like basic tile countertops in the kitchen, which is a huge,
huge, huge kitchen is a huge property.
Rachael Novak:
[12:33] And they didn't look well. I knew it was going to look very, very dated compared to other
homes on the market. So what we did, we priced out, of course, three beds for countertops, found
some countertops for $4,000. They did full white quartz in it, and it completely resurrected the
kitchen, completely changed the entire feel of the kitchen, look of the kitchen. And they ended up
selling over less price at that time. Very well. So it was a solid ROI for those people. But it was
because they brought me into that decision. We did the rule of three with contractors. and we've
looked at the other homes in the neighborhood to see how it would shake up. So it worked out
really, really well.
Mike Novak:
[13:07] What do you think about cabinet refacing? I get asked that one quite a bit because it's a lot
less expensive than redoing like a whole kitchen.

Rachael Novak:
[13:13] Yeah. And again, it just completely depends because there's multiple different kinds of
refacing, right? You can take off the doors, you can paint the boxes, leave the boxes in place and
put new doors on. You can have the boxes painted and the cabinet doors painted and put back on.
There's multiple different ways to do that. So it really just completely depends on the neighborhood,
on, you know.
Mike Novak:
[13:33] I like it in certain price ranges if you put the new doors on because it makes it look totally
more modern. It totally is, yeah.
Rachael Novak:
[13:41] Yeah, but again, even that can be expensive depending on, right? So that's a very involved
laborious project. But getting us involved way sooner, like even if you're like, I don't really want to
sell for like two years, but I'm thinking of doing this huge project. Like how should I go about it? If
you know you're still going to be selling in the next two to three, five, even five years, get us
involved. We'll be able to guide you on what we're seeing buyers are looking for, what's important
to them in the market right now, what other homes have sold for, and if there's been a good ROI on
any remodels in the neighborhood, right? Like, these are all things that we keep track of. That's
what we look at every single day. So get us involved sooner, obviously, number one. Number two,
Novak, you already kind of touched on this one, but... Please use the rule of three bid out to at
minimum three contractors, because if one is super, super busy and they give you that screw you
pricing that FU pricing and you get two other bids that are super reasonable, you're going to be
very glad.
Mike Novak:
[14:34] Right. And if you're a client of ours, definitely reach out to us and ask us for our vendor list.
Like we maintain a list of approved contractors and we're constantly adding new contractors on
there that are proving themselves to other clients. And we're also removing ones that don't perform
the way that they should because unfortunately just because a contractor has been good in the
past does not mean they're going to be good in the future. Exactly. It's weird. It's like this
phenomenon like hey, did like 10 projects, awesome, and they did horrible on the 11th job. What
happened? And that's just like how contractors work, unfortunately.
Rachael Novak:
[15:03] Yeah, exactly. So, yep, definitely get a hold of us when it comes to that. And really the last
one you've kind of already mentioned but what to do instead, assess the neighborhood comps.
Like get obsessed with what homes you're selling for around you in your neighborhood that look
like yours what they're doing like if they're they have done any sort of remodeling or just cosmetic
updates because the last thing that you want to do is go drop a bunch of money into some fantastic
projects and then be way over built for your neighborhood and not be able to sell because it the the
pricing would never support that the value right.
Mike Novak:
[15:34] Exactly so is there any like no-brainer always pays off upgrades in your opinion.

Rachael Novak:
[15:40] Yes so one of the things that i have a lot of clients do especially with older homes, like 90s
built homes or early 2000s homes, flooring is almost always a no-brainer. So if the flooring is
trashed, exactly. If the flooring is totally trashed, if you've got original builder grade carpet from
2005, carpet is very inexpensive. We just re-carpeted almost an entire house that's going on the
market today, actually, for like, $2,900. And it was a living room, three bedrooms, and another, like,
very inexpensive. So that's going to have a solid ROI for sure, because it's not necessarily you're
going to make that money back. But what's going to happen is now the price is going to be higher
because it's justified with that upgrade, as opposed to with that old carpet, the perception of value
would be way less.
Mike Novak:
[16:23] Right. Yeah. But buyers have this thing where, like, they see something like, you know, old
carpet. And like you said, practically, it's a $3,000 fix. They discount that by $10,000.
Rachael Novak:
[16:35] Exactly.
Mike Novak:
[16:36] They will literally 3X what the reality is.
Rachael Novak:
[16:39] That's exactly right.
Mike Novak:
[16:40] Because they don't know and they don't really want to deal with that either.
Rachael Novak:
[16:42] Right.
Mike Novak:
[16:43] You know what I mean? And so a lot of times just doing those things can definitely help with
the perception of value on the listing to validate the price.
Rachael Novak:
[16:50] And conversely, I have another client who did not take my advice. We did everything else.
We We did interior paint. We had flooring in the main kitchen living areas in the downstairs room,
but they did not want to change the carpet out in the bedrooms and upstairs. And I said, we got two
bids at least, and it was $2,100, right? Well, what happened? She didn't want to do it because
she'd already put so much money into everything else. Okay, so we get an offer, and the offer is
$15,000 less than list price. And when I asked the buyer's agent why they're discounting.
Mike Novak:
[17:25] He said specifically- I know where this is going.
Rachael Novak:
[17:27] He said specifically, they need to get all new carpet.

Mike Novak:
[17:30] Yeah, there you go. That's what he said. So right there, case in point.
Rachael Novak:
[17:33] $2,100 fix or $15,000 discount.
Mike Novak:
[17:36] Yeah, it's a price validator for sure.
Rachael Novak:
[17:38] That's exactly right. So...
Mike Novak:
[17:39] To wrap this up.
Rachael Novak:
[17:41] When it comes to home and property disappointments, upgrade disappointments, don't
make the mistakes that we laid out, right? Don't go ahead and over-upgrade for the neighborhood.
Don't use wicked expensive materials unless your neighborhood can justify it. Don't get only one
bid and go with the first person. You really need to get us involved. You really need to use the rule
of three when it comes to contractors. And then, of course, assess the neighborhood. What's
actually selling? What are my neighbors doing? and what kind of price point is realistic and
attainable for my house in this market.
Mike Novak:
[18:11] Right. And I'll just drop a little bonus tip here. Do not turn your garage into an additional
bedroom. That does not actually increase the value of your home. In fact, it dramatically diminishes
your buyer pool because people want a garage like nine out of 10 times.
Rachael Novak:
[18:25] Exactly right. I've told people that for years.
Mike Novak:
[18:28] That one always gets me when I like sold these people a house like seven years ago, I go
back and they've turned the garage to a bedroom. I'm just like, oh my God, like you're going to
have to put this back to someone's house. And we have. It's like literally a deal killer for most
buyers. And the way that sellers look at it, at least some of the ones I've encountered, they're like,
well, this is more square footage. And they run a price per square foot analysis thinking their home
is now worth more, not realizing they just drastically shrunk the buyer pool for their house.
Rachael Novak:
[18:52] That's not how it works in that case.
Mike Novak:
[18:53] No. Yeah, exactly. We should do a future podcast and talk about why price per square foot is
not how you determine why. That's a whole other conversation. That is a whole other conversation.

Rachael Novak:
[19:01] For sure. All right. Well, if you found value in this, of course, please share, like. Find us on
Instagram at Rachel Novak and...
Mike Novak:
[19:10] The real Mike Novak. Not the fake one, the real Mike Novak.
Rachael Novak:
[19:13] Awesome. See you next time, guys.