Dolan Tip: How much do you anticipate spending on your home improvement project? Whatever you estimate, double it—at least. Homeowners tend to make their guesstimates based on what Daria calls the “Ken Dolan School of Thinking”—that you can still get a loaf of bread for 30 cents and a quart of milk for a quarter.

A Champion Mortgage survey found that homeowners, on average, estimated a kitchen-remodeling project would cost $18,658. Actually the industry average for a major kitchen remodeling is $39,000. And survey respondents estimated that an additional room would cost $16,607, when in reality it can cost around $47,000.

Dolan Reminder: Don’t forget to factor in the disruption-of-your-life index. The two most disruptive home remodels have to be the kitchen and a bathroom.

Improvements That Don’t Add Much Value

A home office will give you a mere 54% return on your investment, according to Remodeling magazine. If you work from home or use the home office to run a sideline business, however, you can take a tax deduction.

Also from Lynda Lyday: A swimming pool, fountains, and ponds don’t enhance the value. You might love those luxuries, but the buyer might not want a bothersome body of water on the property. For one thing, the buyer might be worried about the lawsuit potential if some guest, or even some trespasser, drowns or is injured.

A fireplace doesn’t give you a great return either.

But if these improvements will give you and your family enjoyment and you can afford them that could be reason enough to proceed. A listener of ours named Kenny is a great example.

He and his wife bought a 65-year-old house that needed improvement in a very desirable neighborhood. (We were so pleased to hear they’d taken our advice about buying the worst house in the best neighborhood!) When it came time to begin making improvements, they were weighing the importance of renovating the kitchen versus replacing the old, drafty windows.

We told Kenny to go for the windows even though the kitchen would provide a great return on their money. Why? Because they had just moved in. They weren’t planning to sell anytime soon, but they were planning to run the heat for many winters and the air-conditioning for many summers. They could reduce their energy bills right away with new, well-insulated windows, and those savings were more important at this stage than resale value.

The first thing you want to do is maximize the bucks you’re spending.

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