Whether you’re considering buying a house or selling one, the issue of home improvements is bound to come up. Which home improvements provide the best return on investment, and which ones are better left for later?

The best home improvements aren’t always sexy

The home improvements that return the most – the ones that turn out to be the wisest expenditures – are those that help make the next sale. The old saw that kitchen and bathroom remodeling projects are the gold standard of home improvements doesn’t quite ring true, according to industry statistics. Kitchen and bath remodeling projects can provide excellent returns – sometimes more than 100% – in places where the housing market is hot. The caveat here is that if the home’s basic systems need major repairs, spending money on cosmetic remodeling work doesn’t make good financial sense.

According to professional home remodelers, regardless of market conditions, the best home improvement projects are the ones that improve the soundness and function of the home and its major systems. Buyers will walk past the newly updated house with a leaky roof or foundation to get to the sound-yet-dated house down the street. An original furnace is a turn-off, but the home with the new, high-efficiency model will sell more quickly, no matter what color the carpet is.

Homes where maintenance has been a priority sell faster and hold their value longer than homes that need significant repairs but have the latest appliances and granite countertops. That’s because a buyer’s basic assumption is that the major systems in the house are in good working order. Major repairs require a lot of cash to correct and truly have an impact on the value of the home. Buyers expect to pay less for homes that have problems, and if the asking price doesn’t reflect the home’s true condition, buyers will keep looking.

Home improvements that make sense are also likely to recover most of their initial cost. Older homes were often designed with a single bathroom. In that case, adding a bathroom makes more sense than remodeling the existing one, especially if you can add a bathroom as part of another remodeling project. Buyers who grew up or are living in a home with multiple bathrooms won’t want to downgrade, so a single bathroom –no matter how chic – can really limit the appeal of the home.

Home improvements can certainly fall squarely in the investment category, but the best motivation for completing a home improvement project is that it increases your enjoyment of your home while you’re living in it. The real power in home improvement is knowing the potential payoff of a project before you invest the money to make it happen.