Your home should be your sanctuary. And maybe it once was, but time and life changes have made the space not quite the refuge it used to be. Perhaps your family has grown, or your aging parents have moved in. Is it time to remodel, or is it time to sell and move?
Either option can be a costly undertaking. You’ll want to carefully consider the financial implications before you make a decision.
If you don’t plan to stay in the home for years to come, the money you spend on a remodel or addition could be difficult to recoup if the improvements price you out of the neighborhood.
Remodel vs. Sell: Get an Estimate
Get a cost estimate for your proposed remodel from several licensed building contractors and determine the average cost for your project. Once you have those numbers, a licensed real estate agent can provide you with pre-remodel and post-remodel home valuations to help you determine if the renovations you want are worth the investment.
If, for example, you want to add a third bedroom and bath at a cost of $50,000, but all of the other homes in the neighborhood have only two bedrooms and two baths, you could be setting yourself up for a problem when it comes time to sell.
People buying three-bedroom houses at a particular price point want to be surrounded by homes that are similarly valued. In this case, it may be best to leave the home as it is for a family that only needs two bedrooms, and move somewhere else that better fits your needs.
Selling a home becomes much more difficult, if not impossible, when it is priced far beyond neighboring homes. However, on the flip side, if your home is one of the few that hasn’t been remodeled or enlarged, a renovation could give you a boost when it comes time to sell. Bringing your house up to neighborhood standards or slightly above in an area that’s shown steady value growth could be a wise choice.
Get Professional Advice
Working through these scenarios requires data and the expertise of a licensed real estate agent, who will provide you with guidance at no charge, in hopes that you will consider them to list your home for sale and/or help you buy a new one if you decide not to renovate.
Your licensed real estate agent can also provide you with current market prices and features of homes in neighborhoods of interest to you. The cost to move into a home that already has the features you want at a price that fits in your budget may make more sense than investing in a renovation.
When considering a move, don’t forget to factor in the costs of moving, many of which you won’t recoup unless the value of your new home surges dramatically. Real estate commissions, inspection fees, appraisal fees, financing charges, moving costs, utility deposits, closing costs and other expenses should be considered as you compare the cost of remodeling to the cost of moving.
You may find that when you add up these costs, a remodel of your current home makes more sense, especially if you plan to stay in it long enough for its value to appreciate.
Consider the Big Picture
Look at the big picture. Examine the financial implications of both remodeling and moving, using data provided by a licensed professional.
Will your quality of life improve if you move to a home with an updated kitchen that’s 30 minutes farther from your office? Or would it make more sense to renovate your existing kitchen and save that hour a day, all things being equal? Or perhaps the new home you have your eye on would shave an hour off your commute. In that case, the moving costs may be well worth the expense, even at a loss. Time is money, too. Consider the implications to your lifestyle and your wallet before you decide.