When your house isn’t working for you anymore, the great debate begins: Do you move or remodel? There are many factors to consider.
First, take a look at your existing house and determine what needs to be done to make it function well for your family. Consulting with an architect at this point will help you gather information useful for making a remodeling decision. An architect can help you determine what can be done to your house and a broad range of estimated costs relative to your proposed project.
Next, take a look at the real estate market and see what options you have for both remodeling and moving. A real estate agent can help you determine the value of your current house and the value cap for the area where your existing house is located. This will help you create a realistic budget for the remodeling option. You never want to overbuild for your neighborhood or you will not recoup your investment. On the moving side, a real estate agent can also show you options in the marketplace to help you understand the cost of another home with your wish list features.
These clients decided to remodel instead of move because they loved the character of their older home and liked the location, including the fact that they had family members that lived next door. In the remodel they excavated their basement to double the usual square footage and updated the interior and exterior. (Annie Schwemmer, Renovation Design Group)
It is important to understand that it is unlikely you will find your dream house sitting on the market waiting for you. Every home will have its challenges and things you will likely want to change. Sometimes the choice may be to move and remodel the new place. You need to gather all the information and cost estimates you can while weighing your options.
According an article titled “Should you move or improve?” on houselogic.com, home improvements generally cost less than trading up, but that obviously depends on the scope of the project you are undertaking. The website suggests that homeowners can figure on paying between $100 to $200 per square foot for new construction or a major remodel but warns that figure can fluctuate depending on the type of project and local labor costs.
Recouping that cost is another story. According to the CVV report, that particular project increases the value of the property by 62.2 percent. You can review the report’s 36 popular project costs and paybacks to get an idea of what projects recoup higher values, but none of them report an immediate 100 percent payback. If you are planning on staying put for 5-10 years, general inflation will often help you break even on your investment, but an immediate 125 percent return is only seen on HGTV.
These clients decided to remodel rather than move because the house was built by the wife’s grandfather so they had a sentimental attachment to it, and family lived close by. They did an addition and remodeled the existing home, carefully salvaging and reusing the brick. Many of the design decisions inside and out were made to reflect the elements of the existing home. (Annie Schwemmer, Renovation Design Group)
Many of the design decisions inside and out were made to reflect the elements of the existing home. (Annie Schwemmer, Renovation Design Group)
Houselogic.com reminds homeowners to look around at their neighborhood to help determine what remodeling would be appropriate.
“Keep your improvements in line with those of other houses on your block or risk losing the money when you sell,” the article states. “Of course, don’t discount your enjoyment factor. If it’ll make you happy to install an in-ground pool in a neighborhood without pools, go for it.”
Cost is probably the No. 1 factor people use in determining whether to remodel or not. However, remember there are “hidden” costs to moving as well as renovating. The monetary expenses of moving include real-estate agent commissions, mortgage fees, closing costs, hiring movers and renting a moving van. There are also emotional and psychological costs relative to neighbors, schools, friends, etc., that must also be factored in.
Costs to consider beyond the basic construction budget for a remodeling project include architectural and structural engineering design fees, demolition costs, permit fees, possibly updating old wiring or plumbing, and the cost of additional furniture and window coverings for the new space.
However, your house isn’t just an investment. It is also where you live. People don’t remodel to save money; they remodel because they want to stay where they are. Houselogic.com reminds homeowners that the decision ultimately comes down to “the things you can’t change about your current home,” including school district, access to shopping, commute time, the size and shape of your yard, and neighborhood quality of life.
“If you love the spot, improving makes sense,” the article states. “But if a different location would be an improvement in its own right, then trading up could be the way to go.”