Should I Remodel My House or Move?
Sometimes a home just doesn’t seem suited to you anymore. Your needs may have changed, your family may have grown, or you might just be entering into a different stage of life. At that point, you have to ask yourself, “Is it better to remodel or to move?” Both will be disruptive and expensive, but the right choice for you depends on a number of factors. Here’s a step-by-step guide to figuring it out.
Step 1: What Do You Need?
Make a list of your needs and wants. These are the things that you would desire if you were to picture your perfect house. Your list might look like this:
- Need: An area for an office
- Need: A larger kitchen
- Need: A bigger yard
- Want: Walk-in closets
- Want: A finished basement
Being realistic at this stage is critical. Even if walk-in closets feel frivolous, if they’re more a need than a want, you should note it down now. Otherwise, you could do a lot of work to still feel unsatisfied with the results.
Step 2: Get Your Quotes
Remodeling your house or moving are both major financial decisions. As with most major financial decisions, it’s important to be systematic and precise. At this point, you should get two quotes:
- Remodeling your house for all your needs.
- Remodeling your house for all your needs and wants.
Now, you should ask a professional real estate agent for two prices:
- The cost of a home with all your needs.
- The cost of a home with all your needs and wants.
This is going to give you information on whether remodeling or moving might be more expensive. You could be surprised. It could be that adding everything you need and want to your existing home would be $50,000 but that comparable homes in your area would be $150,000 more.
Step 3: Get an Appraisal
Before you make an educated decision on whether you should remodel your home, you should get an appraisal. This is important for two reasons. First, you know how much you could get if you sold your home. It’s possible that your home has appreciated in value. You might be able to sell your home for $300,000 and get a home with all your needs and wants for $250,000 in a cheaper area.
Second, it might help you pay for your renovations. If you bought your home at $150,000 and it’s now at $200,000, that’s a lot of equity. You might be able to get a home equity loan to pay for your renovations.
Once you have an appraisal, you can draw out your budget. An example:
- Your budget: $75,000 from home equity (or $300,000 sales price)
- Cost to renovate: $50,000 to $75,000 (depending on wants/needs)
- Cost to buy: $250,000 to $300,000 (depending on wants/needs)
Now you know that both of these options are well in range. But one costs you $75,000 of home equity (renovating) while one would be a direct trade (buying). You could sell your home for $300,000 and purchase another $300,000 home with everything you want, or you could spend $75,000 to stay in the home you have.
- Your budget: $25,000 from home equity (or $200,000 sales price)
- Cost to renovate: $20,000 to $40,000 (depending on wants/needs)
- Cost to buy: $300,000 to $400,000 (depending on wants/needs)
This situation is very different. In this situation, you can’t afford to renovate to your needs, though you can afford to renovate to your wants. And regardless of your situation, you can’t afford to purchase a new home.
Step 4: Go Over Other Considerations
It’s not just about raw numbers; it’s also about comfort. Also consider that if you renovate, you’re going to need to spend time outside of your home. You will have to stay at a hotel, which could be uncomfortable if you have children and pets. Renovations will always go over deadlines and over budget. Make sure to make room for that.
For many people, buying a new home is an easier choice. Renovations are complex. But if you have fairly simple renovations, it may still be your best bet. The best way to approach the problem is to look at the data.
If you’re thinking about selling your home, there are fast solutions for you. You can sell your home quickly and painlessly and be on your way to your new property. Contact Frank Buys Houses to find out more.