How Much to Spend on Remodeling Your Home

Remodeling areas of your home can undeniably increase its value and functionality. Proceed with caution, however, as it can be very easy to spend too much money on a home renovation project - and there's no guarantee that you'll be able to recoup your money when you're ready to sell.

How much should you spend on a home improvement project? Let's look at some key factors that will help you arrive at a decision.

Six tips to consider before leaping into home renovation:
  1. Determine the areas in your home that need improvement the most.

    Simple, yet long lasting repairs will yield you the highest returns when your house is placed on the market. The most financially beneficial rooms to remodel are often the bathrooms and kitchen. Newly remodeled cooking areas, counters and cabinets will attract more homebuyers and justify a slightly higher home price than comparable homes on the market.

  2. Consider home values in the neighborhood.

    Homebuyers typically pay more for homes that are in move-in condition. But, they typically don't pay more than the fair market value. So make sure you don't "over-improve" your home for the neighborhood. If you improve two or three major problem areas, the money you spend remodeling your home will be rewarded with a bigger profit when it comes time to sell it.

  3. Determine how much it will cost to do the work.

    Get estimates from several reputable contractors. Add 10 percent to cover changes that will inevitably happen along the way so you have a more accurate estimate.

    To help you further decide which home improvements to make, try HomeGain's free, online services.

    • You start by getting the value of your home instantly at
    • Next you can calculate how much you could increase your home's value by increasing the square footage of your home, adding bathrooms or other rooms in the HomeGain "what if" tool.
    • Use the Seller Tools in the Home Sale Maximizer™ to calculate how much you would spend on 10 recommended home improvements, and how much return on investment you would expect. The direct link to this page is
  4. Consider how long you plan to stay in the house.

    If you plan to stay where you are for a long time or indefinitely, investing a larger amount may prove worthwhile because over time your home may go up in value. Plus, you'll have the benefit of living in a home that you can enjoy and suits your personal needs and style. But, it most likely doesn't make sense to undertake a major renovation if the finished product won't suit your long-term needs or if you plan to sell your house in a few years.

  5. Have your home thoroughly inspected before you start the renovation.

    Depending on where you live, you may want to get a "termite" inspection and/or hire a home inspector to go through your home, point out any defective systems and get an opinion from an expert. You want to make sure you limit the number of surprises and obstacles before the work begins.

    If you recently purchased your home, these inspections most likely should have taken place prior to the home sale transaction, so refer to your real estate agent or documentation for details before spending additional money.

  6. Consult your real estate agent.

    Your real estate agent can provide you with a comparative market analysis (CMA) of your home, so you'll have an accurate market value. Discuss your anticipated improvements and researched costs with the agent to get their professional opinion and advice. Your agent may be able to determine whether you can recoup all or most of your investment when it comes time to sell.

    If you need to find a Realtor in your area, visit or
Before you get started on a major renovation of your home, try to determine whether it makes sense financially and time-wise. If you develop a well-thought-out remodeling plan, you can enhance the value of your home without going overboard with the remodeling costs, and be able to recoup your invested dollars when it comes time to sell.

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