Anyone who’s owned a house for any length of time has faced a similar dilemma. You like the home, but now it’s not exactly what you need or want. You have to make a decision. Do you put the home up for sale, or upgrade the place and settle in for the long haul?
Much goes into answering that question: your emotional attachment to the home, your financial condition, your ability to estimate the return on investment of renovating the home and the affordability of acquiring a new home. These and other factors impact your ultimate decision.
Read on to learn what essential issues you should consider when determining whether to sell your home or remodel it and stay put.
Before deciding to remodel or move, consider your emotions. 30 percent of those in this quandary ultimately move. The other 70 percent keep the same address and alter their homes to address changing lifestyle and family needs.
There is more to your ‘home’ than what is inside the house itself. Think honestly about your relationship with your neighbors and how you feel about your location and the surrounding area. If you have a strong connection to the neighborhood and emotional ties to your home, renovating may be the right answer.
Good residential architects can envision upgrade possibilities you may not see. They are able to fill maximum permissible square footage with optimal functionality.
The result: You’ll enjoy the best of both worlds — a home that fits your lifestyle, located in a neighborhood you already love.
When pondering the question of whether to remodel your home or move, realistic budget planning and analysis are critical.
This should include thinking far down the road. How long will you keep the home if you remodel it? If you do not remodel, will you eventually downsize or move elsewhere? Talking and putting in writing one’s goals is such a valuable tool for identifying the financial risks associated with dreams and aspirations.
Budgeting accurately is also essential if you do decide to renovate.
A lot of homeowners don’t know exactly what they want. If a homeowner has $50,000 and the contractor says he can do it for that – but then their wishes change, they want different materials, it doesn’t come out as they imagined — and that’s where the budget gets blown up.
Many homeowners base their decision to sell on the need for more room. But a more space-efficient layout that adds one more room rather than more square footage can help some homeowners avoid moving.
If you can’t get that extra room, maybe it is time to sell.
Do you face a problem that only a move will address? It could be neighbors you can’t tolerate, the desire to live in a better school district or a constrained physical setting, including home and yard, that will never meet the needs of your growing family.
If that’s the case, you have but one choice: Move.
According to Realtor.com, a kitchen remodel involving new countertops, cabinets, appliances and floors can take three to six months. If ductwork, plumbing or wiring has to be addressed, it could take longer. A bathroom remodel can consume two or three months, while a room addition can require one or two months.
These renovation projects can spill into multiple months, and if it’s their primary residence, it’s very difficult to live in something that’s being renovated.
Before opting to remodel or sell, try to determine what return on investment you will see on either option.
If upgrading, what’s the average return on investment for the renovations you’re considering? Most home upgrades do not pay for themselves in the form of a higher eventual sale price. Some renovations manage to recover 80 percent to 90 percent of your costs, while others barely cover half your expenses.
If you list your current home and move, ask yourself whether you’ll be in the new place long enough to recoup your upfront costs. It traditionally takes seven years to earn back the upfront costs of buying a home, and in most markets today, it’s only two or three years on average.
Weighing against renovation is the risk you will “over-improve” your home versus other like homes in your neighborhood. An over improved home will not sell for as much in its location as it would in a neighborhood with comparable residences.
When I say ‘over-improved’ I mean the house has been expanded much larger or upgraded more extravagantly than any other home in the neighborhood.
When you are in a neighborhood that has starter homes and smaller homes, adding a large addition or doing an extensive renovation may not yield the return one would expect.