The following is a guest post from Tali Wee of Zillow (which just happens to be an awesome website I used frequently when buying my house!)

Home renovation and remolding projects can cost a fortune, so it’s imperative for homeowners to be fully prepared from the beginning of the process to get their anticipated results. Homeowners generally plan upgrades to make their living spaces more practical or comfortable as residents. Those who are remodeling specifically to add resale value have the extra burden of identifying trends in popular demand. The steep prices of remodeling prompt homeowners to make educated choices to earn the highest returns on their investments. Follow these detailed tips to smoothly complete a renovation with the highest amount of recouped funds.

ROI Is Region-Specific

To improve the resale value of a home, the remodelers should take into consideration the total amount they are willing to spend and the trends of their region. Take for example the benefits of a basement remodel. In the South Central United States a homeowner recoups about 82 percent of the cost of a basement remodel in the resale value of the home. Conversely, in the Northeast, homeowners only earn about 56 percent return on investment (ROI). It’s cost-effective to do the research before embarking on a remodel. A great starting point to evaluate the cost of projects verses their resale value in specific areas throughout the country is the Remodeling 2011–12 Cost vs. Value Report. (www.costvsvalue.com)

Focus on Demand

Homeowners should stick to mid-range upgrades with broad appeal for positive ROI. A mid-range addition of a wood deck has an ROI of 70 percent or more throughout the country. Focus on the specifics of popular features to make the resale quicker. Other cost-effective remodels are steel entry doors, attic bedrooms, garage door replacements and minor kitchen remodels of about $20,000. Expensive floor plan remodels may make home layouts more comfortable, but they will not recoup their cost upon resale. Avoid permanent features such as built-ins, converted garages, home theaters or craft rooms. However valuable these additions seem to the current owner, the lack of versatility may deter buyers, and it’s unlikely they’ll earn much ROI. (www.costvsvalue.com)

Set Realistic Expectations

Homeowners who are preparing for a remodel should gather as much information as possible beforehand. Having a realistic understanding of price will affect choices of projects and materials. Account for some cost overruns. Homeowners should have healthy expectations of the return on their investments. There is not a direct correlation between the cost of a remodel and increased home value. For example, a bathroom remodel may cost $20,000 and only add $15,000 to the value of the home. Weigh the cost and the payout to decide if a full on remodel is better, or just a bathroom decor upgrade. Homeowners should make educated decisions about remodeling projects to get the most value for their money.

Be Specific

When it’s time to select a contractor, homeowners should be prepared to explain their vision in detail. Explain to the contractor the exact vision for the new space with example images and material preference. Home remodels should stay consistent with the original architectural style of the home. Be prepared to take advice from the contractor, who makes a living on quality remodels. The more specific the homeowner can be in the beginning, the more in-depth the discussion will be with the contractor. In turn, the bid will be more accurate and the less likely homeowners will be to request mid-project changes or upgrades. Adjusting features along the way is common but alters the timeframe and total cost. Specifics upfront will help keep the project on schedule and affordable.

Compare Bids

Gather at least three bids for the remodel. Homeowners shouldn’t look for the cheapest bid, but evaluate the material and labor costs, timeframe and payment schedule. Ask the contractors about their previous budgets and how accurately their bids reflected the final costs. Contact the contractors’ references and past clients to evaluate their professionalism and quality of work. Homeowners should take time when selecting a trustworthy contractor.

Solidify Contract

Homeowners and contractors should negotiate the terms of a contract. Like a mortgage, this contract should include terms for all portions of the project including cost itemization, payment schedules, timeframes, requirements for each party and penalty fees. The payment schedule should correlate with the completion of significant portions of the project, and the final 10 percent should be held until the entire project is completed satisfactorily. The timeframe should clarify how long each project should take and include penalties for overruns. The agreement should indicate that the contractor is properly insured and licensed, and will acquire necessary permits for the duration of construction. The contractor will provide all tools and equipment. The homeowners will provide prompt access to the property during working hours. The contract should contain a termination clause to protect both the homeowner and contractor.

Homeowners who are planning to remodel their homes for positive ROI have some major decisions to make. They should focus on the location of the home and the popular trends of the area. The more informed homeowners are, the more realistic their expectations will be. Avoid personalized remodels with permanent features. Have a clear vision of the space with example images to relay to the contractors to get the most realistic bids possible. Be selective with the contractor and negotiate an agreeable contract. As long as the homeowner allows plenty of time to make educated decisions then the remodel should be a value-adding success.