Is it better to renovate or sell?
When you love the location of your home and the neighbourhood but it doesn't meet the needs of a growing family, do you stay and renovate or sell up and move on?
When you love everything about your home except the fact that it's not big enough to expand with your growing family, you need to decide whether to stay and renovate or sell up and find a property that meets your needs.
Adrian Goslet of Re/MAX says, "There comes a stage when many homeowners, in particular those that bought a starter home, are faced with the decision to renovate or move. This decision will largely be based on the key factor of whether or not your existing home has the space available for adding on." You will also look at affordability and whether or not the decision to renovate makes the most sense.
When deciding to renovate or move, there is no right or wrong answer to the question since determining factors will differ from person to person based on individual needs and circumstances. Whatever decision you make, it should fit in with your lifestyle, criteria and financial standing.
"Property is a long-term investment and when buying a property most buyers purchase a structure with the potential to add onto when the time comes and budget allows. However, there are also many buyers that purchase a home that is right for them at the time, knowing full well that as soon as their situation changes they will have to relocate," says Goslet .
Both options have their pros and cons, but there are steps that homeowners can follow to assist them in making the decision a slightly easier one. The first step is to determine the value of the property, as well as the estimated cost of the required renovation project.
Renovation vs. Buy
For any project it is vital to factor in all costs involved, including materials and the labour costs to complete the job. Where the renovation impacts the existing structure of the property, it is a requirement that you have a building inspector sign off on the plans - before any work on the project begins.
Plan for any contingency by making sure to add an additional 10% to the renovation costs. This should cover any unexpected issues that may occur during the construction phase.
"Depending on the duration of occupation on your current home, as well as the conditions surrounding the market, there is a good chance you would have built up equity, and this could be used towards the purchase of a larger property," says Goslet.
While determined by your needs and budget, it may be possible to find a home that meets your criteria and has some additional features such as an extra room, a double garage or proximity to good schools.
There is the alternative of not finding anything within the price range, which means it would be more feasible to undertake the renovation project. One way or the other, comparing apples with apples will help make the decision easier.
Research is essential:
Before renovating or adding to the home, it is best to find out the average property price in the neighbourhood. If the renovation costs exceed the average house price, it may be quite a few years before you would be able to sell the property and recoup the money spent on the project.
Below are a few guidelines to take into consideration for those looking to answer the renovate-or-move question.
When to consider a renovation:
• You love
the location of your home and the neighbourhood.
• You can tolerate living in a construction site or moving out of the house for a while.
• You want to have complete creative control.
• You have a reliable building contractor.
When to look at moving:
• You want to
change your location, for example, in search of
better schools or a shorter travelling distance
to the office.
• The disruption of a renovation is too much to handle.
• Renovations may cause the property to be overpriced for your area.
While both options have positive and negative elements, each also provides an opportunity to move one step closer to owning your ideal home.