SELL OR REMODEL: How To Get The Most For Your Money

Do the walls seem to be closing in on you? Are your cupboards and closets overflowing with stuff? Can you see more toys than flooring at your feet? If so, you need more space. And your choices are remodel your home, move to a larger one, or move to a home that you want to remodel.
How can you decide which approach is best for you? Start by considering your priorities. If you are basically happy with your current location, the relative cost of your options is likely to make the decision for you.


Wish List
Take an inventory of your current house to determine whether remodeling will work for you. Look at each room. Do all of them need help? If so, remodeling may be too expensive and a move might be your only practical choice. If just one area of the house needs work that can be accomplished by bumping out a wall or adding on, then remodeling may be the correct move for you. Consider what you would have to do to the basic structure of your house to arrive at your dream home.

Cost
How much money can you afford to spend? Would you need a construction loan to remodel, or would you take money out of your home’s equity? If you must borrow money to remodel, will the cost of the loan, combined with your existing mortgage payment, be more than the monthly payments for a new home with the space and amenities you want? Moving may be easier and less expensive.

Calculate how much it would cost you to replace your current home with one that meets your needs. What improvements could you make to your current home for the same investment? Will a new addition of, say, a master bedroom suite, be enough to satisfy your desire for a new look and more space? Or do you need more living space all over the house?

Is your desire for newer amenities the driving force for a new home? If you’re looking to modernize wiring and plumbing or increase hi-tech capabilities, it might be better to move into a house that already has these features.

Payback
Most homeowners start remodeling with the kitchen or a bathroom, both of which can cost a fair amount of money to upgrade but also show better-than average payback at sale time. Will it be a worthwhile investment? The answer depends on the type of payoff you’re looking for.

If you decide to remodel, don’t expect to recoup the funds spent on home improvements when you eventually sell the property. Some remodeling projects are likely to be far more financially rewarding than others, yet few yield a 100% return. If you can keep costs down, however, perhaps by doing some of the work yourself, your project might pay you back in full at sale time, maybe even show a profit. Remember, though, the primary reason for remodeling is to meet your living needs, not to make your house worth more.

The point of some projects is simply to bring a house up-to-date. Remodeling a 1960s-era kitchen would make your home more competitive (at sale time) with 21st Century homes. A new kitchen would almost certainly increase your home’s value compared with neighborhood homes that haven’t been upgraded.

Recognizing Limits
Don’t make the expensive mistake of remodeling your house just to sell it faster or at a higher price. You’ll waste your money, frustrating your ability to move into a home that better meets your own needs. Put your current home on the market in clean, well-cared-for condition, but save your money to redesign or decorate your next, more-spacious house.
Also, be careful when remodeling or expanding your home that you don’t over-improve. Remember, your home’s value reflects (and is limited by) the value of homes in your immediate neighborhood.

House Or Community?
For some homeowners, the community or lifestyle they enjoy in their current home is a great reason to stay put. You can’t buy a sense of community -- it’s something you develop over the years. If you are unwilling to trade familiarity, friends and neighborhood for a larger home in another area, then remodeling could be the best solution.

As you consider remodeling, however, be sure your current neighborhood can carry the evolved house. If yours is the only house in the community that has been bumped out or up, it may be difficult to sell eventually, and you’re not likely to recoup much of your remodeling investment.

Don’t forget to check local zoning laws and homeowner association limitations if you intend to add on to the dwelling. If your house already takes up a large portion of the lot, local zoning may limit how much more house you can build.

As you consider improvements to your home, keep in mind that landscaping and exterior appearance will attract buyers to your home. Once they get inside, they’ll be looking for functionality, durability and convenience.

Before taking on remodeling projects or major additions to your home, give us a call to see if we can help you find an existing home that meet your needs.

If you have any real estate related questions email them to me at: mike@cribbinrealty.com.