There’s inevitably a time in most people’s lives when they face a decision—should they remodel their current home, or should they move? If this is the situation you’re currently in, you realize your current home isn’t working for you, but do you want to go through the hassle of moving?
If you renovate your home, you have to prepare not to be able to use parts of it for a while, and you may have to move out altogether. You’ll have to pay for the costs of the renovation itself, another place to live, and you’ll also have to rent a storage unit for your furniture and other items you’re going to keep when you move back in.
Of course, moving is a huge undertaking too. You have to put your house on the market, and while you’re trying to find a buyer, you have to look for another home, put in offers, and hope one gets accepted. Then, you start the real work of actually moving out of your current house and into a new one.
So which path is right for you and your family?
The Costs Of Moving
If you’re thinking about moving, the costs that can come with this option include:
- The costs of selling: It costs around 15% of the sale price of a home to actually sell it. You have to pay an agent’s commission, which is usually around 5% of your sale price. You might end up paying thousands to get your home ready to go on the market. You could have to make major repairs in some cases if your home is older or has problems with safety codes. You will also have to pay anywhere from $2,000 to $4,000 in title insurance. If your home appreciates in value, you’ll have to pay capital gains taxes.
- The costs of buying: When you buy a new home, you may need to buy new furniture and appliances. You might have to do some remodeling on this house as well, plus closing costs, home appraisals, and title insurance. There’s also the risk that you could end up paying two mortgages simultaneously. The costs of the move itself can be upwards of $5,000 if it’s cross-country or up to $100 an hour for a local move.
- Upgrading your home: If you’re upsizing, then your home is probably going to cost you more in terms of property taxes, utility usage, and the higher cost of living in the neighborhood. Your mortgage is likely to be more expensive, so more of your net worth is tied in with real estate, you’re probably going to have a big down payment, and you’re going to have higher interest payments.
The Costs Of Remodeling
The average renovation in the United States, according to Home Advisor, costs $46,788. The range is anywhere from $18,372 up to $77,016.
You should break down, and price out each aspect of a remodel if this is something you’re considering.
Permits, architectural planning, labor, and materials all need to be budgeted for. You should add at least 20% to your initial budget as a contingency because there will inevitably be problems and unforeseen costs.
Understand Your Local Real Estate Market
Your real estate market and even your neighborhood can play a role in whether it’s best to stay or go. If you live in a hot market, selling can make more sense.
You can learn more about the trends in your area by researching recent comps nearby. You should also be honest with yourself about how appealing your home would be to buyers in its current condition. If you speak to an experienced real estate agent, they can give you an opinion on what they think your house is likely to sell for.
Your home might have gained a lot of value, but if you want to stay in the same neighborhood, those home values will also have gone up, so your equity isn’t going to stretch as far as you might hope.
How Emotionally Attached Are You To Your Home and Neighborhood?
If you have no emotional attachment to your home and neighborhood and you need more space or your home no longer fits the needs of your family, then moving can be an easy choice for you. On the other hand, you could feel very connected to your home and community.
You can’t underestimate the importance of your kids’ school currently, the sense of community you share with your neighbors, and things like your favorite restaurants, parks, and amenities that might be nearby. These are all factors that play an important role in your quality of life.
What Do You Want to Achieve?
A remodel isn’t going to solve certain issues. For example, if you don’t like your neighbors or your kids’ school district, then you can’t fix this with a renovation. Another issue is if you don’t like your home type or overall style. Maybe you live in a townhouse, but you want a single-family home.
Another issue is if you need square footage. If your home is simply too small, adding square footage is costly, and the city might not even permit it, even if your lot would allow for it. If you need a bigger home, moving is going to often end up being the more cost-effective option.
What Will Your ROI For A Remodel Be?
Finally, you’re going to remodel your home because you want to make it more functional and livable for you, but it’s also probably your biggest investment, so you want to think about your return on investment if you remodel. Certain projects are going to have a much better ROI if you do decide to sell down the road.
You have to find that balance between your personal needs and your ROI. You also need to be aware of the risks of over-improving your home. If you remodel your home to the point that it’s a luxury home in a lower-priced neighborhood, it’s going to be hard to sell it down the road if you want to.