The following is from an article that was recently featured on servicemagic.com

When undertaking large remodeling projects, it is smart to research your local real estate market to find out if your project will return your investment when it is time to sell. Depending on where you live, the right project may return 100% of your investment. That is why research is the smartest way to begin any remodeling project.

Remodeling projects should be done when you are planning on staying in the house for several years rather than starting major work for the sake of trying to increase resale value. Since you can't guarantee that you will get a decent return, it makes the most sense to remodel when you will be able to enjoy the benefits in the long run; and make minor, more cosmetic changes if selling is your primary goal.

Here is a sample of returns for some of the most popular home improvement projects. Statistics are compiled from multiple published surveys. Based on major cities within states:

Kitchen Remodel (minor)-125% (Connecticut)
Basement Remodel-98% (California)
Bathroom Addition-96% (Missouri)
Kitchen Remodel (major)-92% (Kentucky)
Bathroom Remodel-90% (Oregon)
Exterior Paint-90% (Pennsylvania)
Master Bedroom-86% (Florida)
In general, across many markets, kitchen and bathroom remodeling offer the highest percentage return on your investment (80-100%). Bathroom and family room additions offer a fairly high return also. A master bedroom remodel can potentially get a high return. Certain projects such as converting a basement or attic into functional living space varies widely from region to region. The same is true for deck additions.

Repainting the exterior of your home shows decent returns in most markets. When preparing to sell your home, sprucing up your exterior paint is important. Without curb appeal, potential buyers will not even stop or get out of their car to give your house a chance. Repainting is only part of curb appeal. A well-manicured lawn and attractive landscaping will grab buyers' attention as well.

When considering a remodeling project or addition, you should not only do research in your local market, but also look around your neighborhood. Any improvement you make should be consistent with other homes on your block. An elaborate addition in a modest neighborhood will stick out and will not provide the return you are hoping for based on the fact that someone who can afford the extra money to buy your home will most likely search a more expensive neighborhood.

Along those same lines, keep the original design of your home in mind. Stick with either the same materials or complementing ones. Aim for a flowing congruency so that your home remains tastefully appealing on the inside and out. Think through color scheme and decor in much the same way. Bold, eccentric color schemes that will stay with the house after you sell can deter potential buyers who lean on the conservative side. Being flamboyant with your remodel is a fine idea for those homeowners who plan to stay in their home for years to come. For those of you looking to move in two to three years, choosing neutral colors for floors and walls will benefit you when it's time to sell.

When trying to decide whether or not you should take the plunge and remodel, think of your own needs. If you absolutely want to add on a deck, go for it. If you have a spacious basement and could use a children's play area, don't hesitate. By concentrating completely on the return you might get from a home improvement project, you are limiting your options and basing your decision on a factor that is constantly changing. Depending on the economy, the real estate market in your area, and other factors, your return could be more or less than you expect when it is time to sell. As discussed earlier, the two that consistently offer significant return on investment are kitchens and bathrooms.

Just remember that for the immediate future, you will determine the value of a luxurious bathroom remodel or sunroom addition. The enjoyment of improving your home for the rest of your time living in it might far outweigh what money you get back when it is time to sell. Who knows, you might like your new and improved home more than you thought so that you never want to move!