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You may need a building permit to add a closet, depending on the size and kind of work required to install it. The most likely scenario requiring a permit involves changing the structure of the house and performing electrical work for closet lighting. A permit can cost between $100 and $450. If you’re installing a smaller reach-in closet, a permit may not be required, but always check with your local municipality and consult a closet designer or builder.

Yes, adding a built-in or custom closet generally increases your home's value and makes it more attractive to potential buyers. A well-designed closet adds utility, organization, and a touch of luxury, which are appealing selling points. Most homeowners see a return on investment (ROI) of 50% to 60%; for example, a custom closet can add about $1,000 to your home's value on average. The specific ROI depends on the type, with custom walk-in closets typically providing more value than reach-in closets. However, to maximize value, ensure the closet doesn't significantly detract from the room's usable square footage. Converting an entire room into a closet can actually lower your home's value. Similarly, using overly lavish materials may not recoup their cost. A good strategy is to add a closet that takes square footage from a non-living area, such as a garage, to create a mudroom closet.

Different types of closets are defined mostly by size. A few different types of closets include:

• A reach-in closet is a smaller closet that you can stand in front of and reach everything inside it. Aside from the size, the doors and the level of drywall finish are typically the largest price factors.  

• A walk-in closet can be anything from a small 5-by-5 feet closet that has a narrow walkway with shelves on both sides to a 100 square foot bedroom-sized closet with shelving along the walls and plenty of room to move around in.

• A built-in wardrobe often does not have a door and leaves the clothes and other contents open to the room, whereas a closet usually has a door to separate it from the rest of the room.

Bump-out additions can add some space to a closet without requiring any significant structural work. This entails pushing back the existing rear or side of the closet, simply moving the wall into either an adjacent room or unused space. For ground-floor closets, this could even be extended to the exterior of the home, but that has its own complications. Bump-outs are a good discussion to have with your contractor if you’re just looking to increase the space a little—not renovate the entire closet space.