We had a borrower years ago whose appraisal came in much lower than she expected and she was irate b/c the appraiser gave insufficient or no value to many of her upgrades and improvements.
Specifically, she had spent over $100,000 on a wall treatment in her foyer. The wall treatment, interestingly, was a textured gold and black monstrosity that probably had a negative impact on value.
In any case, this story is a near perfect example of “functional obsolescence,” where the cost of an improvement is not recaptured in the market. Many homeowners do not understand this. The cost of many improvements simply do not increase the value of a property.
Interesting aside: The homeowners in the above story lived in a 6,000+ square foot house with almost no furniture; they spent all their money on the wall covering and other “improvements.”
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