Ready to Trade-In Your Home? Perhaps You Should Remodel Instead!
Ready to Trade-In Your Home? Perhaps You Should Remodel Instead!
Deciding Between Moving and Remodeling: A Comprehensive Guide
When faced with the decision of whether to move or remodel your home, it's important to carefully evaluate both financial and emotional factors. Here’s a structured approach to help you make an informed choice:
Financial Considerations
Moving Costs:
Home Purchase Price: Determine the cost of purchasing a new home that meets your needs. A local real estate agent can provide estimates based on current market conditions.
Sale of Existing Home: Assess how much you can sell your current home for. Be sure to subtract the real estate agent’s commission from this estimate.
Moving Expenses: Moving costs typically amount to about 10% of the value of your current home, according to real estate consultant Dan Fritschen. Factor this into your budget.
Increased Property Taxes: Calculate how your property taxes might increase as a result of moving to a new home.
Remodeling Costs:
Project Costs: Identify the remodeling projects you want to undertake and estimate their costs. An architect or general contractor can provide detailed estimates.
Value Addition: Determine how much the improvements will increase your home's value, known as the "payback." A local real estate agent can assist with this evaluation.
Emotional and Lifestyle Considerations
Reasons to Move:
Better Schools: Relocating to a neighborhood with superior schools for your children.
Reduced Commute: Moving closer to work or better local amenities like restaurants and shopping.
Neighborhood Preference: If you are dissatisfied with your current neighborhood.
Space Limitations: If your current yard is too small and cannot be expanded.
Reasons to Remodel:
Location Satisfaction: If you are happy with your current location, neighbors, and schools.
Home Layout: If you love the layout of your home and only need minor adjustments.
Space Needs: If you need only a bit more space to make your home perfect.
Making Your Decision
Pros and Cons List: Create a list of pros and cons for both moving and remodeling. This will help clarify which option better suits your needs.
Open Houses and New Developments: Visit open houses and new housing developments to compare your current home with available options.
Consultation and Research: Consider reading Dan Fritschen’s book, Remodel or Move, or visiting his website for additional tools and insights. His site features a calculator to help quantify the impact of your decision.
Next Steps
If Remodeling: Define your remodeling goals clearly before finalizing details with contractors or architects. Avoid changing the project scope mid-stream to prevent cost overruns.
If Moving: Enhance your current home’s appeal with low-cost improvements, especially in the kitchen and bathrooms, to maximize return on investment.
Financing: Ensure you have the proper financing in place before proceeding with either option. Consult a mortgage originator for purchasing a new home or a mortgage professional for remodeling to understand your financing options and align them with your financial plan.
Making a decision between moving and remodeling requires careful consideration of both financial implications and personal preferences. By evaluating these factors thoroughly, you can make an informed choice that best meets your needs and goals.
