Remodel Your Property Or Move
Every home is unique, and every person has different priorities, including their budgets, real estate markets, and homes. The process of settling the remodel-versus sell debate will vary depending on who you ask. These five steps will help you make the right decision.
Decide Whether Moving Or Remodeling Is More Economical.
No matter what path you choose, you will incur costs. What makes sense for one homeowner might not work for another. Moving is cheaper for some homeowners. Some homeowners find it more economical to renovate their existing houses. You will be able to determine which option is more affordable by weighing all costs.
Selling Costs
Many sellers focus on the profits they will make selling, but they often overlook the expenses associated with selling. Unfortunately, these are some of the most common expenses.
Commissions For Agents
You will need to pay 6 percent in agent commission if you are selling to a full-service agent. Although you can reduce these costs by using a discount broker to help you, it will require that you do more work.
Moving Costs
Everyone pays for moving costs, regardless of whether you are doing a DIY move and paying for boxes, storage, and a rental truck, or a full-service cross-country move with an experienced moving company.
Minor Repairs
Even if you don't plan on making major changes to your home to make it ready for sale, there are still minor repairs and touch-ups that can be made to ensure that your home is attractive to buyers who will pay the asking price. According to research, the average cost of preparing their home for sale was $6,570. This includes cleaning carpets, cleaning out the lawn, and staging your home.
Cost Of Buying A New House
You may consider trading up to a larger home if you aren't downsizing. However, you may end up spending more money if you decide to remodel instead of sell.
Upsizing Cost
A key factor in trading up is how much it will cost to maintain your home and pay for utilities. For example, do you need square footage? Expect to pay more for heating and to cool your home and converting from a condominium to a single-family residence? In addition, you will likely spend more on lawn care and exterior home maintenance.
Remodeling Costs
Remodeling costs are less expensive than selling. When all is said and done, it's all about the cost of remodeling. You should establish a budget to avoid spending too much on the room that you are remodeling. Let's say your home is worth $200,000, and your kitchen occupies 10-15% of its square footage. You shouldn't spend more than $20,000-30,000.
Get an estimate from a contractor to determine the cost of your renovations. You should have an exact estimate for each item.
Permits
Depending on the local regulations, you may not need a permit to make interior cosmetic changes, such as painting floors or refinishing them. However, if you are making structural changes or adding square footage, or updating plumbing or electrical systems, you will probably need a permit. You will also need to verify permits and restrictions if your community regulates your home's exterior appearance, such as paint colors. Your contractor should be able to tell you which permits are needed based on what work you request.
Architectural Plans
If you are required to obtain a permit for a project, you will often be required to submit plans to the city. Make sure you account for these costs. If an HOA board is looking at your plans for renovation (e.g., condo owners), it may require you to submit plans, even though the city does not require them.
Materials
Your renovation costs can be greatly affected by the materials you choose. You dream of a luxurious kitchen with quartz countertops, custom cabinets, and a beautiful backsplash. This will cost more than builder-grade cabinets and laminate countertops. It's important to decide exactly what you want before construction begins. It will cost you if you change your mind during construction.
Labor
If you have a larger project than a simple DIY job, you will likely hire a professional such as a plumber, electrician, or landscaper. It's easy to overlook labor costs, such as demolition costs or time-intensive requests like tile work.
Additional Costs
Plan ahead for any other renovation expenses such as a hotel room for temporary work, storage space off-site if you are refinishing floors, or eating out if your kitchen is not usable.
Financing Costs
It is also important to decide how you will pay for the remodel. Calculate how much interest you will pay and how that will impact your long-term finances if you don't have cash. The following are the most popular ways that people pay for renovations:
Refinancing - Depending on the current interest rate you have, you might be able to refinance to a lower rate. This could allow you to save money for renovations.
Cash-Refinancing: If your equity is sufficient, you might consider a cash-out refinance. This allows you to refinance at a higher amount than you owe and gives you some equity.
HELOC: A home equity loan of credit (HELOC) is a revolving credit line that is secured by the equity in your home. Like a credit card, you are charged interest for the amount that you use.
Home Equity Loan: An alternative to a HELOC is a home equity loan. This loan, also known as a second mortgage, can be taken out on your house in addition to your existing mortgage.
Hidden Costs
There are always unexpected problems in home renovation projects. Consider adding a cushion of 10-20 percent to cover these potential issues.
Research Your Real Estate Market
When it comes time to decide whether to renovate or sell, your local real estate market and even your neighborhood can play a significant role. It may be more sensible to sell if you live in a hot market. These are some ways to assess the market's state:
Do your research in the area to find out what your house is worth.
Evaluate your home's marketability and appeal to buyers. Does the home require a lot of work before listing? A well-maintained home sells more quickly than one in poor condition, even in a sellers' market.
Talk to an agent: An expert local agent can offer you a professional opinion about the value of your home.
Take into account the area you are moving to. If your home is in great shape, but you still want to live in it, you should consider that other homes in the area have also increased in value. Your equity may not be as large as you think.
Assess Your Emotional Attachment To The Community
Your sell-versus-renovate decision is more than money. Moving if you have roots in your current area might not be the best decision. These are some factors to consider:
Children: You live in a great school district, and your children have many friends.
A sense of community: You should be able to get along with your neighbors and build trust within the community.
Distance from work: A move may require a longer commute.
Fun and Activities: All your favorite restaurants, shops, and parks are close by.
Family If you are close to family, especially if they provide child care or elderly care, you can count on them.
Take into consideration your timeline requirements, regardless of whether you are looking to move or make improvements.
Once you have accepted an offer to sell your house, it is almost set. You can get an idea of the average selling time for a house by looking at your local realty market. It is often difficult to predict how long it will take for an offer to be accepted. However, you should be able to predict when your home will close once it's under contract.
Remodeling requires patience and flexibility. Although your contractor may tell you that the renovation will take eight weeks to complete, they could extend it if there are any changes or issues.
Realize The Problems That A Renovation Can Solve
Although it is easy to believe that a remodel can fix everything in your home, it is not the answer. Some things are just impossible to fix with a renovation.
Neighbors If you have noisy or inconsiderate neighbors, there is no way to make them leave.
Unfavorable School District: If you want your children to attend public school, they will have to go to the neighborhood school unless the private school is available.
Home type A renovation is not possible if you live in a condominium, but you need a single-family home with a yard and garage.
Square footage Another piece of home-renovation advice. It can be very expensive to add square footage to your home, but only if you have enough land. Moving to a larger home than you currently own may be more affordable.
What To Prioritize For Your Personal Needs?
While your ROI is important, your happiness is equally important. Keep that in mind as you plan your renovation. For example, you may love gardening and want to have a greenhouse in your backyard, but that won't be the case for most buyers.
Know The Dangers Of Over-Improving
It might be time for you to move if your tastes and preferences have grown beyond the local market. You are likely to lose a lot of your investment if you build a luxurious home in a middle-priced area.
Do I Need To Remodel Or Move Into A Luxury Property?
You might reconsider renovating an existing home if you want luxury, custom, or a top-of-the-line home. However, there are financial risks in over-improving your home.
You can easily make your home more expensive than you need. This will result in you not being able to get much back when you sell your house. If you are looking for high-end home and can afford it financially, you may be better off buying a home in a desirable area.
Calculate Your Remodeling Return-On-Investment (ROI)
You may be renovating your home to make it more comfortable, but eventually, you will want to sell it.
