It’s never simple to decide whether to renovate or move, especially if you love your area and community. Renovating your home might transform it into everything you always wanted or boost its market value, but it can also be costly.
However, a new home can provide you with a fresh start and additional room without the effort and expense of renovating. There is no right or wrong answer when it comes to determining whether to remodel or sell your home.
However, if you’re debating whether to upgrade your current home or start over in a new one, below are some essential things to consider before making a final decision.
Figure Out What You Can Afford
Examine and assess your costs and opportunities. For example, if you renovate your current property, how long do you intend to live there?
If you want to move in a few years, regardless of the property’s state, it’s advisable to save the expense of a home repair project and start searching for a new house.
If, on the other hand, you adore the neighborhood and want to stay until retirement, a little attention over time may go a long way toward ensuring that you preserve and live in the home you love.
Know Your Competition in the Real Estate Market
You should always find out how competitive the housing market is right now. The best way to do that is to partner with an expert realtor who has both the knowledge and resources to provide you with a solid market analysis.
A comparative market analysis (CMA) provides you with a snapshot of recently sold houses in your neighborhood. Your realtor should be able to serve you with a CMA, which can help you determine whether your home is better than similar houses in the area.
If the property you want to buy is receiving multiple bids, you might want to think twice. In a hot housing market, contingent offers are significantly less likely to be accepted, thus placing you at a disadvantage as a potential buyer.
The alternative would be to sell your house and rent a place while looking for your next home. However, each month you pay rent, you are essentially throwing your money away.
If you choose to go this route, ensure you have a plan in place that helps you buy your next property sooner rather than later.
Avoid Over Capitalizing
Avoid overcapitalizing by speaking with local real estate agents and appraisers to determine the existing worth of your home and the potential value added by the makeover. It may not be profitable if you spend more on renovating than the additional value to the house.
In many cases, minor renovations are safer than renovating your entire kitchen or installing a new bathroom downstairs. Those types of costs will be lost when it comes time to sell your home.
What Are Your Chances of Getting a Return on Your Investment?
Some home upgrades and repairs are more likely to pay off than others. A small kitchen makeover, for example, might add over $18,000 to the worth of your property, while changing the garage door can add over $3,000 to the resale value.
Plan and Design
Communicate with tradespeople like an electrician or a plumber to see whether your idea is feasible. Obtain quotes and delivery schedules, and ask for a margin of error if the job takes longer than expected.
If your renovation will take a few years to complete, and at that time, you’re ready to move to a new area or neighborhood, then it would probably be best to skip that project and just work on getting your home prepared for the market.
Materials & Costs
The next thing you need to consider is the costs associated with purchasing a new home and the associated material costs. Many people don’t realize that building a new construction home can have many additional fees that weren’t originally included.
For example, once you have chosen the design of the house— there will be choices to make when it comes to flooring, appliances, textures, and modifications to meet your needs.
You must also budget for various expenses, including title transfer fees, new loan application fees, lender mortgage fees, property appraisal fees, and a deposit provided to the seller.
What Is Your Timeline?
If you think upgrading is the way to go, figure out how long you’ll be staying in your current house. Take a medium to long-term perspective since the cost and investment may not be worthwhile if you are not committed to remaining put for a while.
A typical rule of thumb is that it’s not worth upgrading if you plan to relocate within five years, especially if you’ll be spending hundreds of thousands of dollars.
Remodeling your house will cause a lot of disruption and noise, and this might be difficult if you have a small child or work from your home office. Depending on what you need to upgrade, that may mean going weeks without a kitchen or a second bath.
Most people who renovate their homes use savings or a mortgage to pay for it, while some folks take out a loan (construction loan) or use a credit card. Just be mindful of the interest rates on the last two lines of credit and that if you pick them, you will likely be limited to smaller projects.
Similarly, there are considerable fees associated with selling and purchasing, so it’s wise to budget for them ahead of time, so you’re prepared.
Permits & Approvals
Depending on where you live, you may need to acquire permits or permission to make particular renovations within your city or county. Aside from the price of hiring professionals for blueprints, you may also need to get licenses and council approvals, which may be costly and time-consuming.
If time is of the essence, you should be aware that It could take years to start construction and finish the project in a timely manner. When the market is demanding, so are the resources— meaning construction projects are also in demand.
In general, a well-presented home will sell for more money, but you must budget carefully for renovation costs. A fresh coat of paint might not add as much value as you think if the house you’re attempting to sell is in bad condition.
Buyers may be turned off if a house appears to need too much work. Therefore, the goal is to make it look as neat as possible to reduce the perceived amount of work required while spending the least amount of money.
In the end, the choice to sell or renovate is personal. Learn as much as you can about the property market and other properties for sale in your neighborhood before deciding to sell your home as-is.
If you have questions about renovating or selling your home as-is, contact us today for our expert advice and tips to make the best decision.