Should You Remodel or Trade Up?
Real estate agents often hear from clients who are interested in home buying because they “need more space” or they want more “modern” kitchens. There may be other reasons their current homes don’t fully meet their needs: a new job, a new relationship, a new baby and so on.
But buying a new home is never the only solution. In fact, in some cases it may be better to remodel or renovate the home you have. Here are some things to consider when deciding whether to remodel, renovate or buy:
Buying means selling, too
Often, the desire for more space leads the homeowner into a simultaneous buy/sell situation. Given that lending standards are still tighter than they were a decade ago, it’s nearly impossible for most people to buy a home before first selling their current home. That means being in limbo — potentially homeless — until they find a new home. This brings up a great deal of uncertainty.
Buying and selling at the same time is stressful. For starters, in many parts of the country, the inventory of available homes is limited. Yes, you can sell your home, but with inventories so tight, where will you go? Few people want to take that gamble. This is keeping many people, and potential inventory, on the sidelines today.
Buying and selling also comes with a lot of costs. The seller pays the real estate agent’s commission, for instance, along with closing costs on the buy side, plus moving expenses and more. Though it might not be music to a real estate agent’s ears, your money may be better spent on a remodel or renovation.
Credit is easier to obtain
With property values up, homeowners in some parts of the country are realizing an increase in equity of 10 percent to 20 percent over just a year ago. If you suspect that your home equity has increased, call your local bank or mortgage professional or do some research online. You might be surprised to learn that a bank will lend you money — more than you might imagine — against the equity in your home. Also, a home equity line of credit (HELOC) is considered a mortgage, therefore, the interest part of the loan is tax deductible.
Turn to pros for help
You likely have lots of ideas about what you want to do to your home but are unsure about where to begin or how realistic the changes are. And it’s likely you have no idea how much proposed changes will cost. Don’t assume anything. Go and get the information. If you don’t know a good, local contractor or how to get the information you need, ask for referrals from friends and family. Go online and ask your social media circles for recommendations; explore contractor reviews online.
You don’t have to think big
Making your home a better place to live does not necessarily mean doubling its size or adding an extra bedroom. Sometimes, small changes can make a big difference: a change in the color of the kitchen cabinets, painting the home or changing the flooring. These relatively minor cosmetic fixes can add a lot of value to your home as well as to your life. Don’t assume you need to go crazy to make a real impact.
Prepare yourself for stress, change
Buying and selling a home at the same time is a big deal. But managing a home renovation can also be stressful. Think hard about your options, do the math and consider making changes to your current home. You may realize that remodeling is something you’re comfortable with, and it could be a better option than selling and buying.
Above all, don’t assume it’s time to sell just because your home isn’t “perfect” for you anymore. With a little work, it could be just what you need after all.
- How to Investigate the Neighborhood Where You Want to Live
- How to Make a Low Offer on a Home
- How to Buy and Sell a Home at the Same Time
Brendon DeSimone is a Realtor, a nationally recognized real estate expert and author of the book “Next Generation Real Estate.” His practical advice is regularly sought out by print, online and television media outlets including FOX News, CNBC, USA Today, Bloomberg, FOX Business and Forbes. An active investor himself, Brendon owns real estate around the U.S. and abroad and is licensed to sell in California and New York. Consumers often call on Brendon for advice and to help them find a real estate agent. You can follow him on Twitter or Google Plus.
Note: The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinion or position of Zillow.