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Remodeling: When to Skimp or Splurge

This story is part of a bigger MoneyWatch package on when to skimp and when to splurge. Click here to see other stories in the package.

Remodeling spending looks like it's on the upswing. The Harvard Center for Joint Housing Studies, which tracks this kind of stuff, expects a rise in remodeling spending by the end of the year and predicts a double-digit increase by the first quarter of 2011.

The average cost of a project? $6,200. But some remodels help you more than others when you're ready to sell. As a Realtor, I see it all the time. Just this month I've seen a bad choice of paint colors, inappropriate lighting, a poor choice of finishes, and even a bedroom built out in "the wrong place."

However, the good news is that some things are pretty consistently easy to resell. If you're considering a remodel, here's what you should skimp (and splurge) on:

When to Skimp
1. Kitchen Cabinets
In my experience, you're not possibly going to match your next buyer's taste: if you do something that looks like elegant English bespoke cabinetry, they're going to want something sleek and modern, and vice-versa. Just changing the existing cabinet facing is only about half as expensive as replacing the cabinetry altogether, and often just as sensible. The one exception I would make to this rule is if you can create a bit of storage that's particularly trendy in your area. In Manhattan, now, for instance, pull-out pantries are hot, so right now they're worth the several hundred dollars it costs to install one.

2. Master Bathroom Remodel
Anecdotally, the days of the Roman spa next to the master bedroom are out; statistically, adding a bathroom is going to raise the price of your home by nearly nine percent, according to a National Association of Realtors study quoted by HGTV's Kathy McCleary. So if you're in a mood to do a major bathroom tangle, add (especially if you've got a one-bedroom house) rather than spa out. If you simply must make a change to master bathroom, swap a single-sink vanity for a double-sink vanity. Even after you pay the plumber, that's just a few thousand, and it makes your home more appealing to dual-income couples who are jostling each other while getting ready for work.

When to Splurge
1. Windows
If you put in energy-efficient windows before December 31, you're eligible for a tax credit on those windows -- 30 percent of the cost, up to $1,500. (Note that this has to be for your principal residence; window replacements on an investment property don't qualify.) In addition, you can usually recoup a big percentage of your investment in windows when you sell. According to Remodeling Magazine's Cost vs. Value report, if you replace vinyl windows in the midrange price range, you can expect to get 76.6 percent of your investment back when you sell; the numbers for wood windows are even slightly more favorable, 77.3 percent. If you're doing an upscale job, the numbers aren't quite as good, but you can still expect to get more than 70 percent of your investment back.

2. Lighting
According to research from real estate website Home Gain, 97 percent of real estate agents recommend that sellers "lighten and brighten." This includes replacing burnt-out bulbs (yes, shockingly some sellers don't do this) and using more light when possible. I would extend that to adding more light to a traditionally dark room -- whether it's adding another layer of light, such as an under-cabinet strip, in the kitchen, or just lighting the closet in a less-than-sunny bedroom. Return on investment? a whopping 580 percent.

Alison Rogers is the author of Diary of a Real Estate Rookie, a memoir with homebuying tips.

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