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Adding On: Be Careful Not to Overbuild

The most ambitious renovation or remodeling project you can undertake is adding a new room or wing onto your home. Add-ons, however, can be a little risky: Aside from the high cost, experts say homeowners should be careful not to "overbuild" their home in relation to their neighborhood.

For example, let's say the average home price in your neighborhood is $200,000 and you decide to spend $75,000 on a sunroom addition. You may greatly enjoy the sunroom while you live there, and it will certainly help set your home apart from others when you decide to sell, but it probably won't add anything close to $75,000 to the value of your home. This is because buyers usually won't pay above a certain percentage of the average home price in a neighborhood, no matter what kinds of upgrades it has.

Here are the average costs (nationwide) and returns on investment for several popular home add-ons, according to Remodeling magazine's most recent Cost vs. Value Report:

Project Cost ROI
Bathroom addition $39,045 60%
Garage addition $58,432 62%
Sunroom addition $73,167 51%
Family room addition $82,756 65%
Master suite addition $103,696 65%
Two-story addition $156,309 69%
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