When remodeling to sell, start small and pick projects wisely

CHICAGO (MarketWatch) -- If your New Year's resolution is to sell a home in 2008, it's probably time to start thinking about how to make that home stand out from the rest.

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But before planning a single project, beware: Homeowners aren't able to recoup as many improvement costs as they did in recent years, according to a recent study by Remodeling magazine. In fact, real-estate agents advise clients not to overdo it regardless of what the local market conditions are like.

"It's more important that it's neat, it's clean and it looks spacious, rather than making sure it's the top of the line," said Cheri Kuhn, broker/owner of Waters Realty in Minnetonka, Minn. She cautions her clients to bypass projects that aren't necessary.

"The thing I find with sellers -- if they do a lot of remodeling -- they will take the cost of the remodeling and add it to the cost of the home and ask the buyer to pay for it," she said. But often they're not going to get that higher price.

That's because asking prices are based largely on comparisons with similar homes in the area, she added. And in the many markets that aren't exactly booming right now, buyers have more negotiation power over the price of the home.

To keep costs down and spend remodeling dollars wisely, consider the following five tips:
1. Ask for advice
Prior to making any remodeling plans, declutter your home and rent a storage unit if necessary to hold extra stuff while the home is on the market, said Shannon Aldrich, a Realtor licensed in Maine and New Hampshire with Keller Williams Coastal Realty. Then, get some advice from a local real-estate agent on how the home stacks up against the competition, she said. "I see more houses in a month than most people see in their lifetimes," said Aldrich, who has written a series about getting rooms ready to sell on her blog. Sellers can use that experience to their advantage when deciding what projects to do. Visit Aldrich's blog.

When Kuhn first meets with clients -- sometimes six months before listing the home -- she'll make a prioritized list of improvements that will make a difference. Cleaning the carpets, painting the walls and removing wallpaper are common fixes -- if they're needed. It's wise to budget for these tasks before putting money aside for more expensive projects.
2. Dig deeper
It also could pay to look below the surface by getting a home inspection before listing the property. That way, problems that could hold up a sale are addressed in advance, said Dan Steward, president of Pillar to Post, a Tampa, Fla.-based home-inspection company. Some estimate...