The decision to remodel or sell will depend a lot on how a home compares with others in the neighborhood.

Analyze the character of the neighborhood. If a homeowner ends up with the best house on the block, the investment probably won't be recouped. A small house located in the middle of larger homes may be a good candidate, if the remodeling can be done within a reasonable budget.

To protect against over-improving a home, have a real estate agent prepare two CMAs of the home: one in its present state and another reflecting homes in the neighborhood that would fit the description if the remodeling project is completed.