(MONEY Magazine) – Houston Rocket

Triple-mint '70s contempo on cul-de-sac in Prestonwood Forest

• 4 bed, 2 bath, 2,115 sq. ft.

• High-end renovation, plus outdoor deck, spa, gazebo

Dream price: $200,000 Actual sale: $144,000

THE LOWDOWN Houses in this middle-class neighborhood, about 30 minutes north of downtown Houston, have been selling for $52 to $71 a square foot, or around $121,000 on average. But when this home was damaged by a tropical storm three years ago, owners Karen and Jim McSheehy didn't just repair the damage, they went all out: granite countertops for the kitchen and bathrooms, stainless-steel appliances, custom-built hardwood cabinets, a glass-block shower and new electrical wiring, among many, many improvements. "Everything we touched snowballed," says Karen. Insurance picked up half the total tab, but the McSheehys, who bought the house in 1999 for $104,000, ultimately spent $40,000 on their own.

THE SELLING PRICE Just $68 a square foot, or $144,000, barely $20,000 more than the house probably would have sold for without the renovation. "In a better neighborhood, they would have gotten $200,000," says Re/Max agent Leslie Nichols, adding that she encouraged the McSheehys to "be realistic" about their asking price. "This area is not known for granite countertops. Most homes have laminate." Local property appraiser Carlos Millan agrees, noting that plenty of home construction nearby has created a highly competitive market for sellers. "In their price range," he says, "particularly in older homes, you'd be lucky to recoup half of what you put into the renovation."

THE LESSON "We never thought we'd want to move," says Karen. "Never say never." Except in this case: Never price yourself out of your own 'hood. Before you sign checks for chic materials and custom fixtures, ask your neighbors what kind they've got. If no one else has shelled out for stainless-steel faucets or granite counters, chances are your future buyer won't either. --CYBELE WEISSER

NOTES: As of Feb. 11. [1] $359,650 or less. [2] More than $359,650. SOURCE: HSH Associates (hsh.com).

The banks below offer some of the best loan rates and terms. Use them as a benchmark for your own shopping. Visit hsh.com for more deals.

NOTES: As of Feb. 4. Rates and terms subject to change. [1] Combined loan-to-value ratio: the combined principals on mortgage and equity loan divided by appraised value of the house. SOURCE: HSH Associates.

NOTES: As of Feb. 14. Largest REITs by market capitalization. [1] Annualized. [2] Price change only. SOURCES: Thomson/Baseline, Bloomberg.