Remodel your home's selling price

MADISON, Wis. (1/6/10)--With a glut of houses now on the market, if you want to sell your house you have to play it smart. Remodeling to improve your home's appeal to picky buyers is a tempting choice, but it has always required careful consideration.

You don't want to sink money in a remodeling investment with poor payback prospects when you're competing in a time of weak demand.

The rate at which various home improvement jobs recouped their cost in 2009 varied from a low of 48.1%--for remodeling a home office--to 128.9%--for installing a steel front door, says the National Association of Realtors (NAR.com Dec. 17). So bear in mind that what's important is not that you remodel, but what you remodel.

Here are tips about smart remodeling from the Credit Union National Association's Center for Personal Finance:

Choose your job carefully. Don't expect to recover all remodeling costs. The steel front door replacement was the only job in the 2009 NAR cost survey that recouped more than 100% of its cost.

All other jobs recovered 83% of the cost or less. "Glamour" projects such as a bathroom remodel (61.6% of costs recovered) and sunroom addition (50.7%) logged among the lowest recovery rates. In fact, the very best time to remodel is not when you're trying to sell your home. It's when you expect to stay there for a few more years, so that you can enjoy the improvements you've paid for.

Choose your contractor carefully. If you decide to go ahead, get recommendations from friends and neighbors. Because contractors often specialize, it's best to talk to people who had work done that is similar to what you're planning.

Of course, when you talk with contractors, you'll want to ask about the estimated cost, start date, and time to completion. Don't stop with those obvious questions. Also ask for references--then contact several. Find out about the contractor's work, both quality and habits. For example, did workers show up on time, clean up the job site each day, and stay in regular touch throughout the project?

And most important--as Renee Rewiski, president of the National Association of the Remodeling Industry, told Home & Family Finance Radio--ask references if they would ever hire the contractor again.

Choose your lender carefully. Credit unions nationwide regularly offer their members lower rates on loans of all kinds than banks offer their customers. That's because credit unions are not-for-profit financial cooperatives whose members are owners. Talk to the people at your credit union for details about a home improvement loan for your enjoyment and improved resale value.