A significant planning stage in any remodeling project is the consideration of practicality. Practicality requires that homeowners ask and answer certain questions before visiting with remodeling contractors. In any large remodeling situation, one prudent questions is this: should you remodel or move?
It always helps when a homeowner can determine what boundaries they will place on the size, cost, and complexity of the proposed project, even if that choice means they ultimately must shop for another house.
Conventional wisdom once held that if the improved value (cost of the home added to the cost of the improvement) was above the top values in the neighborhood, the improvement was a poor idea. So moving to a new location was the primary solution for families in search of major changes.
While moving is, at times, a viable alternative to over-improving the current home, there are many factors to consider before deciding to sell. Selling a house and moving is itself a costly and disruptive process.
The costs associated with moving often go overlooked when homeowners debate this question. Commonly they add the current house value and the theoretical cost of improvements to arrive at a price they can use for new home shopping. And it almost makes sense – thinking that if you are willing to pay that total figure in order to stay put and do the desired remodeling, then you would also be OK to budget that same figure for a ‘new to you’ already-improved home elsewhere.
Why do I say “it almost makes sense”? Because they are only thinking about the purchase price of the new home. They are failing to consider the costs associated with the sale of the current home, the move itself, and the costs of moving into and setting up the new home. All of these costs are in addition to the purchase budget!
In nearly all cases the cost of moving significantly exceeds the combination of the current house value plus the cost of remodeling the current house.
Costs associated with selling the current home include repairs and improvements (to maximize the sale price), realtor fees (from the sale), and the expense of boxing up the life of a family and preparing to move. The costs associated with the move itself include the packers and packing supplies, the movers, and the time you need to take away from work to make these steps happen. The costs associated with the move-in and setup of the new home might include some cosmetic remodeling (cleaning, painting, flooring changes), the need for new or additional furniture for the larger or additional rooms, and in most cases – new window treatments.
Additionally, there are the unseen “costs” that can wear out the most steadfast families.
- Negotiating the repairs and sale of the existing home
- Taking time off work to shop for a new home that actually meets the family’s needs
- Negotiating a fair purchase price
- Arranging new loans or financing for the new home purchase
- Paying the taxes and fees associated with the new home sale
The intangible costs of a move also need to be considered. And truthfully, this is why so many more folks are choosing to stay put even if it means over-improving:
- Changing schools, churches, grocery stores, rec leagues, etc.
- Different (often longer) commutes to work, school, church, etc.
- Leaving friends and neighbors behind
And sometimes it simply comes down to a matter of the heart.
Perhaps you love your home and can’t bear to leave it. Maybe it’s your first home where your children were born and raised. It could even be a perfect neighborhood or a fabulous lot that you could never replicate elsewhere. Many times such intangibles are too powerful to overcome and leave behind.
All the considerations noted above matter. But the “stay and improve” families count the daily improvement in their quality of life as a major payback. They also know that they will recoup a large percentage of their home improvement costs at resale. As this trend continues, neighborhood and home values will rise.
I suppose the most fitting Move or Improve adage is the old real estate slogan: “The three most important factors in determining real estate values are location, location, location.”
If you’re planning to remodel, CLICK HERE to get a copy of my Free Guide “Prepare to Remodel in 5 Simple Steps”
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