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How much should I spend fixing up my home?

First of all, if you want, can afford, and will enjoy a home improvement like a revamped kitchen or an additional bedroom, then by all means go for it.  However, if you are considering a home improvement purely for the purpose of resale, you may want to keep your wallet closed.

Each house and neighborhood is different. So while adding a new bedroom may add equity to many homes, it may not necessarily add value to your home.   If, for example, your house is already the most expensive home on the block, then you most likely will not recoup your investment.  Your real estate agent is a great person to consult about which improvements will increase the equity of your particular house.

Still, there are some improvements that, time after time and house after house, increase equity. The 2000 Cost vs. Value Report, compiled by Remodeling magazine and published by Realtor Magazine, compared the costs of the 11 most common home improvements to the amount homeowners reclaimed a year later in resale. As each area of the country is different, the report included figures from 60 cities in the United States. The report found that minor kitchen repairs, such as new paint, cabinets and appliances will on average brought back the highest average return  – 81 percent. That means investing $8,500 into your kitchen should return $6,885 on the resale of your home.

The second most cost-effective improvement was a bathroom addition. On average, a second or third bathroom returns 72 percent of the cost.  So, for a $13,000 bathroom, you would see $9,360 come back to you. And the third most cost-effective improvement is remodeling already existing bathrooms.