Over the years, you have heard stories about homeowners who have greatly improved their net worth by remodeling homes and selling them. However, while remodeling can add value, there is no guarantee that a future buyer will pay you enough to get back your investment.

Mull over the example of a homeowner who lost his home in the Oakland Hills, California, through a firestorm in 1991. Rather than rebuilding, this fire victim decided to buy an existing replacement home. He invested his insurance proceeds in the purchase and subsequent remodel of the property. When he decided to sell the property several years later, he barely recouped the money he had invested in the renovation. He had over-improved the property for the neighborhood. Buyers were not willing to pay more than the property was worth on the open market.

Some homeowners fall into the trap of thinking that their home is worth what they paid for it, plus the money they have invested in remodeling projects. This logic is often faulty, and can result in unwise investments.

REMODELING TIP: Before tackling a major remodel, make sure to have the property inspected by a structural pest control inspector. It’s also a good idea to have an engineer look at the foundation to make sure that you’re not investing good money to improve a home that’s sitting on a bad foundation.

Another reason to inspect the infrastructure before remodeling is that you may be able to upgrade facilities while you’re taking care of routine maintenance. Before starting an extensive remodel of the kitchen, another homeowner had a termite inspection done. The report revealed dry rot in the master bathroom.