With the overabundance of home renovation shows, it's safe to say the popularity of renovating is growing every year. It is important to note that, like so many other things in life, it is not the same as it appears on our TVs - it can be way more expensive, and it takes longer than expected.
Humans are, by nature, sentimental. We are also species of habit; hence, it is often hard for us to stay put and not leave a place we have called home for many years. We only get to make the tough decision to sell if there are more significant factors at play, like not having enough room for a growing family.
And every property gets old – that's just a fact. But the vast majority of properties, through several different owners, are brought up to modern standards and kept in good repair through renovation over the decades.
Deciding whether to renovate or sell a home is never easy, especially if you love the neighborhood and community. What would be the best strategy? Here are some points to consider.
What are the benefits of renovating?
Here are a few considerations if you are trying to decide renovation makes sense in your situation:
Long-term plans
As with most renovations, you are more likely to end up paying more than you will gain back if you sell. It is totally fine if you plan to stay for a long time and have ample time to enjoy your investment. But if you are planning on moving in a few years, this may not be the best way to go.
Location
Do you generally love your home, neighborhood, and school district? If so, renovating could be a good decision, even if you cannot expect to completely recoup your renovation costs when you sell.
Budget
Before starting any work, determine how much you are willing to spend on renovation. Compiling estimates from contractors can help you understand what you can accomplish within your budget.
Taxes and utilities
Make sure to read on the energy and tax implications if you are planning to do an extensive renovation, as major upgrades could potentially increase your utility and property tax bills.
Overall, the key benefits of renovating over selling include:
Improving the comfort and functionality of your home
Potentially increasing the value of your home
Lowering energy costs (if upgrading to more energy-efficient appliances)
What are the risks of renovating?
As previously mentioned, one of its biggest risks is overcapitalization. Another is the fact that most renovation projects take much longer than initially planned.
If you have to move out of your home during a structural renovation, the delays can vastly increase your holding costs as you will need to pay additional rent where you are staying in the interim. Make sure to create detailed budgets and try to stick to them, and set aside contingency funds for cost and time overruns.
To avoid overcapitalization:
Set a budget
Connect with realtors in your area and find out what homebuyers are looking for
Look for low-cost improvements (e.g. paint, new fixtures, new light fittings)
What are the benefits of selling your home and moving?
If you are considering selling your home and moving into a new one, you may want to consider the following:
Price
Can you afford the type of house you want? Before making a decision, drop by a few open houses in your target area and talk to real estate agents. This will give you a ballpark figure of your ideal home. At the same time, have your current home appraised to determine the cost difference between selling and buying. Don't forget to check in with a mortgage officer to get an estimate of your new monthly payment in different scenarios.
Real estate market
You should also consider how competitive the housing market is. If your dream home is getting multiple offers, you might want to reconsider. Contingent offers are unlikely to be accepted in a hot market and might put you at a disadvantage.
Convenience
Another benefit of selling and moving to a new home is your flexibility in accommodating your family's current and future needs without having to go through a tedious renovation.
What are the downfalls of selling and moving house?
Moving and change, in general, can be stressful. And this is why so many choose to stay rather than go.
Another downfall to selling and moving house are the costs involved, which often run into the tens of thousands of dollars.
Some of the fees tied to selling can include:
Conveyancing
Marketing
Agent fees
Property styling your house to a "sellable standard"
Which strategy is right for me?
Renovating can yield a solid profit, but it is also hard work. It can run over time and over budget relatively quickly.
On the other hand, selling up and moving can be the right decision if it allows you to upgrade your home and your neighborhood. Still, it is also stressful, and there are plenty of costs involved.
Before deciding which strategy is the right one for you, perhaps consider these questions:
How much work does the current house need to reach the standard I want or need?
How will I finance renovations/moving?
How much equity do I have in my current home?
How will my decision affect my family?
Is the state of the current market favorable to selling and buying somewhere else?
There are some situations when a property is beyond repair or may cost a hefty amount to renovate. Ash Creek Properties can provide you with an all-cash offer, no repairs necessary. Close and move out on the date of your choosing. Got questions about selling your property? Contact us today.