Buy or Build – Should You Renovate or Sell Your Starter Home?
Outgrown your home? Deciding whether you should expand, refurbish or sell depends on many different factors. Here’s some things to consider.
This article was originally published on Capital One’s BrandVoice
Sponsor content courtesy of Capital One
Owning your first home is a big step. You said goodbye to lease agreements and embarked on an entirely new financial adventure. You own a home!
Then you had kids. Got another dog. Acquired more furniture. Maybe you’re just more financially stable than you were in the beginning. Whatever the reason, you’re ready for a change.
The question is, do you sell and buy something new or do you remodel and expand your current home? Here are 6 questions to consider when you’re faced with this situation:
How Attached are You to Your Home?
It’s not just your house, it’s where you created a home. But how much of that is attached to the walls you own? Emotional value can carry a lot of weight when it comes to where we live. If home is where your heart is, then maybe moving is off the table.
If the investment to remodel is for your enjoyment only, it might be worth the price. But just how long do you plan on staying? The answer to that question will probably influence your decision.
Will Renovations Add Value?
You’ve decided to stay put. You love your home and you’re not leaving it. But you need more room to play. Or you need more rooms because of more kids. Whatever the issue is, it’s time to expand and upgrade.
Consider the cost-to-value ratio of certain upgrades before you start splurging. Small ticket items like a newer, bigger washer and dryer add might solve your immediate need to do more laundry. But will it add value to your home or will you have to replace them again down the road? Take a look at research, like Remodeling Magazine’s 2018 Cost vs. Value Report, to get a better understanding of which projects warrant higher resale value for your home.
If renovation is beyond your budget, a new home could be the economically sound decision. At least at this point you’ve learned lessons with your current house and know what to look for in the next one.
Can You Afford to Renovate?
Renovate. Remodel. Expand. No matter what you call it, it costs money to make home improvements. Figure out which improvements provide you with the most value and which upgrades offer the best return on your investment. Then shop around for the right contractor(s), and collect multiple estimates to compare against.
While remodels come with the bonus of not having to move permanently, you still might have to relocate during construction. If there are construction delays, you could be out of your favorite space for much longer than you expected.
On the pro side, you get to customize your renovations and keep everything that came with your home, like neighbors, school zones and the view. Whatever sold you on your house in the first place stays with you, plus you get some upgrades.
Is it the Right Time to Sell?
No matter how ready you are to move on, the market might dictate a different strategy. If resale value in your area will cause you to take a significant loss, it might not be worth it. On the flipside, if the numbers add up and you’re ready to relocate, a new home could prove to be a good investment.
If you decide to sell, know there will be costs associated with the selling process. Have equity in your current home? That equity could help pay things like relator fees.
Alternatively, you could use that equity to renovate your current home. As general contractor, Garry Gallagher, puts it, “with home prices where they are right now, you could have enough equity headroom to where you can borrow enough for a renovation and keep your home.”
Enlisting a realtor is a good idea no matter what you decide to do. They’ll be able to provide market insight that you might not know about, like not pricing yourself out of the market.
What’s Worth More?
Determining emotional value can be difficult, especially when compared to financial worth. In deciding on whether to sell or remodel, first decide how emotionally valuable your home is to you. Then create a list of the financial responsibility that comes with keeping your home. Is the emotional investment worth the financial expense?
Ask your family their opinions. Talk to people–real estate agents, general contractors, neighbors. It could make or break a decision you thought you were set on.