Never hire a contractor without first taking the following steps, according to the League of homeowners:

  1. If your state has a licensing board for contractors, call them. And ask the board if there are any outstanding complaints against that license holder.
  2. Contact your local Better Business Bureau to see if there are any complaints on file.
  3. When interviewing, ask prospects about their worker's compensation insurance.
  4. Get the policy number and phone number of the insurance carrier. Call to be sure the contractor is covered. if he or she is not, any work-related injury on your property could become a liability to you.
  5. Check to see that the contractor has an umbrella general liability policy.
  6. Always ask for references.
  7. Always take the time to call and verify them.
  8. Do not give in to pressure to make a decision. Believe it or not, there are more contractors than there is work to be done. If a contractor insists that you make a quick decision, move on to someone else.
  9. Never pay a deposit to a contractor. If you are asked to pay a deposit fee at the first meeting, simply end the meeting.

According to Remodeling Magazine's annual "Cost vs. Value Report, remodeling a home not only improves its livability but its curb appeal with potential buyers. Among the hottest improvement projects in 1995 were updated kitchens and baths, home-office additions and more amenities in older homes in order to compete with new homes on the market.

The highest paybacks come from the latter projects, according to the magazine's 1995-96 survey of more than 300 real estate professionals. "The resale market is tough right now and you need to give your home every competitive advantage you can, one agent said.

While home offices are a relatively new remodeling trend, adding one to a house recoups 58 percent of the costs, according to the survey.

The biggest factor outside of a homeowner's control is market conditions. But other issues including the condition of the property, specific home improvements and neighborhood stability and safety can influence property values.

The greatest rise in home prices occurs when the economy is strong and the number of home sales is increasing.

Though markets vary, that has occurred twice in recent history in the early 1970s and the late 1980s. However, single-family homes appreciated much more than condominiums. While overall market conditions are out of the homeowner's control, other factors are not.

For example, specific home improvements can increase the value above the cost of the improvements. According to Remodeling magazine's 1995-96 Cost vs.Value remodeling report, a bathroom remodeled returns 81 percent to the owner, a bathroom addition, 89 percent and a master bedroom suite, 82 percent.

Remember, quality pays. Well-planned and executed remodeling jobs are a good investment while bad work seldom enhances value or livability.

Homeowners living in high-crime areas have organized community watch programs, which not only lower the crime rate and rid a neighborhood of graffiti but also have been known to enhance property values.

So-called "diamonds in the rough" distressed properties or fixer-uppers can be found in most communities, even the wealthier neighborhoods. A distressed property is one that has been poorly maintained and has a lower market value than other houses in the immediate area.

Ascertaining whether a property is indeed a "diamond in the rough" is a process that takes some work. A buyer must figure what the average house in a given area sells for, as well as what the most desirable houses in that area are like and what they cost.

Some experts suggest that buyers who take this route try to find a "cosmetic fixer that can be completely refurbished with paint, wallpaper, new floor and window coverings, landscaping and new appliances. Buyers should avoid run-down houses that need major structural repairs. A house price that looks too good to be true probably is. A smart buyer will find out why before buying it.

The basic strategy for a fixer is to find the least desirable house in the most desirable neighborhood, and then decide if the expenses needed to bring the value of that property up to its full potential market value are within one's rehab budget.