Kitchen Upgrade

I heard someone complaining about their real estate estimates after a $25,000 kitchen upgrade. It seems the homeowner didn't understand pricing.

Let's say that, today, a home is worth exactly $500,000. After tearing out the old kitchen and installing the new one worth $25,000, the home's value does not increase by $25,000. Hence, the home may end up selling for only $515,000, after the upgrade. The reason for this discrepancy is "overlooked" math. After tearing out the old kitchen, the value of the home may have dropped from $500,000 to, say, $490,000. So, in fact, the $25,000 upgrade was added to a $490,000 home since the previous kitchen, that was demolished, still had a value of $10,000. That's how real values are calculated.