Colin, let me share my lack of knowledge here.
Let me re-state your case"
You purchased a home ion mid 2005...let's say July.
You plan to sell in 2008 Let's say in June
What could you do to maximize the price of your home? Is this correct?
First, What are you trying to achieve with your move? And Why is that important? These answers are critical to helping us provide you with solutions.
Second, what is the local market like? If you don't know, you definitely need a REALTOR to tell you.
If you do know, what are they?
Third, what do you need to net?
Throughout the US, most market are buyers' markets.
Depending upon your answer I have a couple of options:
1. Market is going down - perphaps selling now and renting back might make sense?
2. If you bought a fixer, fixing it up might help your next purchase
3. If you bought the "perfect house", this still might help.
4. If you bought at the height of a boom market, it still might work
This is better than HGTV...
You buy a two bedroom, one bath house. Let's say that you add on a bed and a bath (500 s/f)
If a three bedroom, two bath is selling for $300,000, 1200 s/f, equals $250 / s/f
If you add the bed and bath, let's say it costs $100 / s/f, or $50,000 to build
Generally, there are a couple of characteristics:
1. the cost of constructions is generally less than purchase. In our example, taking a two bed/one bath home, compared to a three bed, two bath, is a big jump.
2. If the cost for purchase is $250K,/s/f, and the cost for construction is $100, s/f. that means that , ideally, you would pocket $150- per s/f (500 x $250= $125,000. less the construction costs 500*$100= $50,000. equals $150,000 in profit.
No profit margin is not necessarily linear, this is an example. If you compute the time, effort, inconvenience, etc., into the project, you, the owner, "pay the price", the new buyer, reaps the benefits.
The buyer buys a three bedroom two bath home for $300,000. You purchased a two bed, one bath home for say $180,000, plus $50K for the additional bed and bath, so $230K , sold it for $300,000, you "made" $70,000.
You can certainly do some "paint and cleanup" that will help, but usually nothing pays off like adding square footage. So, time permitting, adding square foot living space trumps most other improvements.
Generally speaking, given your time frame, adding on is the "best return" your time and money. Look at some homes on the market that are what yours "could be". Get some info, then see if the numbers make sense.
I hope this helps.