Hello and welcome to Money Girls Quick and Dirty Tips for a richer life.

I'm your host Laura Adams.

Today's topic is about real estate valuation

and which home improvement projects will bring you

the most bang for your buck at resale.

One of the most important real estate tips I can give you is to never over-improve a property.

Over-improvement is putting more money into your home relative to the value of similar properties in your immediate neighborhood.

In terms of getting the most value for the size and features of your home,

it's actually better not to be the biggest most expensive

house on the block. If you have a smaller or less expensive home in a neighborhood of more valuable

homes, their market value will tend to pull yours up.

Let's say you want to remodel your bathroom and it's going to cost $15,000.

Does that mean that after the remodel you can sell your home or condo for $15,000 more than before the

remodel?

Usually the answer is no.

You rarely get a dollar for dollar increase in market value from remodeling projects.

To understand why this is the case, I'll give you a brief overview of how real estate is valued.

There are three approaches or methods used by licensed real estate appraisers.

Number one is the cost approach.

Number two, the sales comparison approach.

And three, the income capitalization approach.

The analysis and calculation of each approach results in a different valuation.

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