Most importantly, the area must be zoned for two family. Is it?
If two families fetch more, sell faster and open up the buyer pool because of the legal ability to collect rent on the rental unit (per the certificate of occupancy update as a 2 fam), then yes, add the value to your property.
However, if the home is declared to be situated in a declining market zone, requiring a 5% increase in down payment for the buyer, homes aren't moving because of an abundance of foreclosures lowering the neighborhood's ability to maintain competitive pricing because of the short sale inventory available, then no, hang onto your money (or yes, do it anyway because the added value benefits you regardless of whether the property sells or not). Hmm... seems like an oxymoronic way to give advice, doesn't it?
This is where a Realtor furnishing a Comparative Market Analysis and a CPA comes in to tell you about the wonderful tax write offs available for repairs/home improvements comes in. We can all advise you, but the final decision is yours to make.
Think about what you really want to do with the funds allocated for your project and if the resources are adequate (e.g. if the home doesn't sell quickly enough the expenditures wont threaten your ability to keep your home or eat), do what brings you the greatest satisfaction and pleasure regarding preparing for the sale of you home.
My name is Michael Marsilio with Century 21 Benjamin, I specialize in residential and investment properties in the queens area. With reagrds to your situation it really varies from property to property. There are several factors in which to consider when legalizing multifamily properties. If you like you may contact me either by e-mail or by phone and we can discuss your situation. I can be reached at either 917-681-5475 or e-mail at email@example.com I look forward to speaking with you.