Question: We're buying an "as is" home that has an add-on room attached. It seems to be made out of metal. We're not sure whether it was built to code. It is unsightly in its current state, but if we can fix it up to be attractive, would this room add value when we sell? If the room wasn't built to meet current building codes, how does this affect the future sale of this home?

Answer: Repairing a serious flaw in your house definitely should boost its value. But determining how much bang for your buck you'll get could depend on what you paid for the house.

Most real-estate agents will tell you that you're unlikely to recoup the full cost of a home improvement if the house was already in great shape and you paid full price for it. But if you bought the home at a discount, there's a good chance that an improvement will make back its total cost and then some. That's because your repairs will have the potential of dramatically enhancing the quality of the home, elevating it from a problem property to one that can be marketed to a big pool of buyers, including those who don't want to invest time and money in an overhaul. Indeed, homes that are bought at discount and have significant problems -- fixer-uppers -- can be a great source of profit for savvy real-estate investors.

Kevin Myers, a real-estate investor and author of the book "Buy It, Fix It, Sell It, Profit" (Dearborn Trade Publishing, 2003), says it's fairly easy to figure out it if it's worth buying a house that needs work. Say you're an investor who's buying a beat-up home for $100,000, and a contractor tells you it needs $50,000 in repairs and upgrades to make it comparable to other homes in the community. You should also add in your other expenses, including your mortgage closing costs and real-estate agent fees, as well as holding costs such as utilities, insurance and mortgage interest. Then talk to a real-estate agent or an appraiser to get a feel for what comparable properties are selling for in the neighborhood. If they're selling at prices that are significantly higher than the bottom-line cost of your home once all the expenses and repairs are added in, you know you have a winner.

There are some important caveats. For one thing, you need to make sure you use the same materials -- and build to the same quality standards -- as the rest of the house. If you don't, the room will stick out and bring down the overall value of the home. In your case, that could mean reconstructing the add-on so that it's not made of metal.

You'll also want to make sure that you don't perform an upgrade that turns the house into the biggest home on the block. Many buyers are reluctant to buy the largest house in a neighborhood, so if you make too many improvements, it could actually hurt your home's resale value.

If you're not an investor, and you plan to live in the house a long time, the equation changes somewhat. In that scenario, you're not looking to make a quick profit on the house, and you'll get to enjoy the benefits of any upgrade, so it's less critical to make sure your improvements will earn back their total cost. Even so, the same principles apply: If you didn't get a discount on the house when you bought it, it's going to be harder to make a good return on your repairs when you sell.

Whatever you do, you shouldn't just let the unsightly or problematic part of the house deteriorate. In some cases, problems with a house can be so large that they can seriously jeopardize your ability to sell the home. An unsightly add-on might also create troubles for you with the local authorities, especially if any part of the house doesn't pass muster with housing officials.

In your case, you should at least try to find out if the room was built to the codes that prevailed at the time it was added. If the room wasn't built to code, local building officials could compel you to make improvements, says Ed Sutton, vice president for construction codes and standards at the National Association of Home Builders. If you don't make the changes, he says, they could even force you to tear down the room.

Another reason to find out if the room was built to code is that most potential buyers will want to know the history of the add-on, especially if you decide not to fix it up. If the room wasn't built to code, it could dent the home's value.

Your local building department should have an idea of whether the extra room was built in accordance with local codes. In most places, homeowners have to obtain a permit from the city or county before embarking on a major home improvement -- and that includes adding a new room. Once the permit is issued, the homeowner could be subject to inspections to ensure the improvement was completed properly. Of course, it's always possible the previous owner made the improvements without notifying any local authorities. But if that's the case, you might be able to hold the previous owner liable for any upgrades needed to bring the addition up to code. Your ability to do so could depend on the details of your "as-is" purchase agreement.

If you don't want to go through the local authorities for fear of tipping them off to a problem, you could hire an inspector to come out to the house to check out the extra room. If you're having trouble finding one, try the American Society of Home Inspectors at www.ashi.com.

-- Mr. Barta is a staff reporter for The Asian Wall Street Journal. His "House Talk" column appears every Friday exclusively on RealEstateJournal.com. E-mail him your questions about the residential real-estate market. Please include your first name and city and state. If your question is answered and posted, we will show your first name and city. Due to volume of mail received, we regret that we cannot answer every question.