Should You Remodel or Move?
At some point you’re going to come to the realization that your current home just isn’t getting the job done for you. Houses are major investments and quickly become homes, so leaving them is not always the easiest thing. And sometimes, it’s not practical to move, so we find ourselves making due.
But during your time in your house, you will probably be forced to either consider moving or doing a big remodel. The only problem is that unbiased advice is hard to come by. If you ask a contractor or someone in the building trades, they will tell you all about the benefits of remodeling and how you can save money and time by not moving while improving the value of your home. Of course, if you ask a real estate agent, they are going to tell you that the money you put into your home will only return a percentage when it comes to selling time. They want you to sell and buy and new house.
So, what do you do?
The Most Common Causes
While everyone is different, there are several popular reasons why someone is faced with this dilemma. They usually come with a significant life change like:
- Birth of a child
- Children becoming teens
- Teens moving out
- Kids moving back
- Aging relative moving in
The common practice of buying a starter home with the idea that you will upgrade as needed usually is what leads to asking yourself these questions. But sometimes it is impractical or not easy for people to move. Maybe the kids have friends in the neighborhood and you have grown close to your neighbors as well. Maybe moving to a new neighborhood would mean a change in schools.
The Nicest House
One thing to consider when you’re thinking about renovating versus selling is the value of your home when you’re finished.
If you have a home that is average for your neighborhood or a little below, then doing a big remodel to bring up its value and give you the room/amenities you need makes a lot of sense. What you want to avoid is improving your house so much that you have the nicest house in the neighborhood. Sure, you’ll get what you’re looking for with the remodel, but when it comes time to sell, you won’t see as much of a return.
You also have to make sure that your remodeling plans conform to your neighborhood’s rules and regulations. You don’t want to get half way through the build only to find out the Home Owners’ Association is going to throw a fit.
Consider the Tax Man
If you move to a bigger home, you’re most likely going to get smacked with higher taxes right off the bat. On the other hand, remodeling your home will most likely not incur increased taxes. The only notable exception being if you finish a basement or attic and increase the amount of living square footage.
Add the cost of increased taxes on top of the expenses you will have to output to sell and move (real estate commissions, moving costs) and see if it still makes sense to move.
The Bottom Line
When deciding whether or not to move, you have to ask yourself:
- If I renovate, will most of my issues with my house be solved?
- If I renovate, am I improving my house to the point where I won’t get maximum value back when I sell
- If I move, can I deal with leaving behind this neighborhood?
- If I move, can I deal with the increased tax costs and the expenses of moving?