Should I Move or Remodel? The Ultimate Checklist
There comes a time when every homeowner looks around, and says, "I wish our house had..." or "I wish this area was like..." One way or another, you are ready for a change. But do you break ground on your current home or break your budget on a new house? On one hand, you love your neighbors, the location and the memories you've made. But on the other hand, you want space. The decision to move or improve can be complex and emotional and depends on your budget, your neighborhood and the housing market. So how do you choose whether you start over in a new place or transform your existing home?
Here’s a checklist that will help you make the right decision.
Are you emotionally attached to the house?
Emotions play a significant role in the decision to remodel or move. If you have an emotional attachment to the house, it would be best to remodel it. If you get the remodeling right, the home’s aesthetics and functionality will significantly improve.
What’s your current and anticipated lifestyle?
Both your current and future lifestyle will influence your decision. If your kids are about to finish college and start living on their own, you may not need a bigger house. A simple renovation project to enhance your home’s functionality and comfort would be an ideal option.
What’s your financial situation?
Both moving and remodeling can be very expensive. Before you settle for either option, be sure you have sufficient finances. If you decide to borrow, make sure you can pay for your dream home in the long term.
Is your home in a seller’s market?
Just because your home is in a seller's market doesn't mean you should always sell. If you love your location and home prices are increasing, remodeling may be the best way to stay put in your neighborhood. If your home's value has increased in price, every other house in the area did as well. Even if you would profit substantially by selling, it's very likely you will be challenged to find something else in your price range, especially if you want to upgrade. Adding on or remodeling might be the most cost effective way to get what you want without sacrificing your location.
How easy or complicated would remodeling be?
Consider how large the gap is between what you currently have and what you are looking for. If it is massive, undertaking an enormous remodeling project may not be worth it. You should think about renovations costs, the amount of time the remodeling project would take, and whether you plan to stay in the house during the remodeling.
When you answer these questions diligently, you’ll have an easier time deciding on whether to remodel or look for a new home.
IMPROVE: If your home is unique.
Your first house hunt was hard enough. Now you want to do it again? But where will you find the perfect home? You only need a great room, a more functional kitchen and an upgraded bathroom and closet. If your current home already comes with some of the special features you require, remodel instead of buying. The more unique your needs and requirements are, the more difficult it may be to find another home with those features and the new things you need.
MOVE: If you'd be building the biggest house in the neighborhood
Take a look around. Have a lot of your neighbors expanded? Or are they mostly chilling in the original square footage? Be aware if you'd be expanding in a neighborhood that primarily has smaller homes. Why? Because when it does come time to sell, you may be restricting your pool of buyers. Before you make any decisions think about the long-term effect and not just what makes you happy right now.
Advantages of Moving
One of the biggest advantages of moving is the fact that you get to select a new location to call home. This can mean looking for a considerably larger or smaller home based on your preferences, but it can also mean choosing a different neighborhood or a lot in the country if that’s what you want. You could even move to an area with better amenities, which is something you don’t get when you remodel your existing home.
You don’t have to live in a construction zone.
You don’t have to deal with contractors.
You can purchase a home that’s move-in ready.
Disadvantages of Moving
You may not get exactly what you want. It’s pretty common to find homes that check off some of the boxes you want — but not all of them.
You may have to leave an area you love.
Buying a home and moving can be time-consuming and stressful.
Moving is expensive. Don't forget to consider real estate commissions, closing cost to sell and purchase, moving cost and any upgrades for the new home.
Advantages of Remodeling
You can plan a remodel to meet your exact specifications. Remodeling lets you choose exactly how everything is created and finished to suit your needs and tastes. This is a big contrast to selling your home and moving since your new home won’t be designed just for you.
You may be able to use home equity to pay for the renovation. If you have a lot of equity, a home equity loan or HELOC would allow you to use your home as collateral and borrow against its value to pay for the remodel. Borrowing against home equity can be less costly and less of a hassle than taking out a new home mortgage as well.
If you love your neighborhood, you don’t have to move. Remodeling lets you stay where you’re at, which can be a huge advantage if you love your neighborhood or the area in general.
You can avoid the costs of moving and selling your home. While remodeling isn’t cheap, you can avoid the realtor commissions, moving costs, and the money you’d likely spend getting your new home exactly how you want it.
Disadvantages of Remodeling
You’ll probably face some surprise expenses. It’s common to run into unexpected issues during a remodeling project. This is especially true if you are taking on a large-scale project that includes tearing down walls, moving plumbing, adding gas or electrical lines and it's almost guaranteed when remodeling a home that is 50+ years old. It's a good practice to include 15% in additional expense for these contingency and unexpected items. If you plan for overages and unknowns, it's a lot easier to overcome than if you don't.
Remodeling can be a pain. The process can be challenging, especially when dealing with budgets, product selections, contractors and potential delays. Depending on how intrusive the remodel is, you might have to live in a construction zone for months or stay with family or in a hotel during the worst of it.
You may not get your money back out of your remodel. While remodeling your home can be cost efficient, most remodeling projects cannot offer a 100% return on your money. According to the 2018 Cost vs. Value Study from Remodeling Magazine, a minor kitchen model brought an 81.1% return on average nationally last year — meaning a $20,000 kitchen remodel would only increase a home’s value by about $16,220. However, those who paid for a major kitchen remodel only recouped 59% of their costs during resale. This also depends on the timing of selling after your remodel..
While there are no hard and fast rules to determine whether you should sell your home or stay put, You should ask yourself what your housing goals will be in the next five to 10 years. If you like your home and it works for your job and your family, then it can make sense to remodel and work with what you have. If you plan to move in a few years anyway, then you may want to consider staying where you are and not remodeling. Think about how your lifestyle will come into play — both today and tomorrow. For example, are the kids now out of college and starting families on their own? If they are or soon will be, you may not need a larger home at all and could benefit from a simple remodeling project to improve your home’s flow or make it more comfortable. Also consider your finances. Moving can be extremely expensive, but so can remodeling. Before you choose either option, make sure you can truly afford it. Money you borrow will ultimately need to be paid back, so you should be prepared to pay for your dream home for the long haul.
Sources: Jamie Wiebe - Realtor.com | AC Development, Florida | Holly Johnson - The Simple Dollar