Should I renovate or move?
You only interact with a house a handful of times before you buy it, and while we have lots of articles on what to ask at an open house, things to look for on a virtual tour, and what to know before you buy an older home, there’s a big difference between touring a property and living in it 24/7 for the span of a traditional mortgage.
Large home renovations are not for the faint of heart.
Sometimes, you might notice something that bothers you that you never realized before (for me, it’s the layout of my kitchen cabinets). Other times, your living situation changes: Perhaps your family has grown, and what was once a suitably sized bathroom is now far too small and far too out of date for your needs.
Even a dream home might not end up being perfect once you live in it for a while. So, we asked some experts to weigh in on the common question: “Should I renovate or move?”
“For most of us, deciding whether we should renovate or move comes down to the cost,” says John Kirshenboim, CEO and owner of San Francisco-area John Buys Bay Area Houses. “To make a decision you can fully get behind and move forward with, you need to compare costs and decide on the angle that best fits your life.”
Kirshenboim recommends starting with an estimate from contractors. Most contractors offer free estimates, and it provides a baseline to see the cost of desired renovations for your home. In addition to the cost of the renovation itself, don’t forget to consider other aspects: Where will you live when you remodel? Do you have a safety fund in case of emergencies or unwelcome surprises?
After you have a real idea of the costs you’re looking at for completing the renovations, compare them with the usual costs associated with buying a new home. Remember, that’s not just the price of the home. This will also include home inspection fees, legal fees, prepaid costs, realtor fees, moving costs, and the down payment, to name a few. Of course, you’ll also need to factor in if the purchase price of your desired home is more expensive than your current home.
Look at Comps
“Search within a half-mile of your house for properties that sold in the last six months to a year. Then, look at square footage and how many bedrooms and bathrooms compared to yours. Look to see if there’s a sizable price difference in houses that have just one more bedroom or bathroom than you.”
If there’s a big price difference, you can ask contractors to provide bids to add a bedroom or bath, he says, then see if it makes sense to proceed.
“For instance, if two-bedroom houses sell for $100,000 and three-bedroom houses sell for $150,000, and the bid to add a bedroom is $10,000, it’s most likely worth doing, as you could potentially add $40,000 worth of equity to the house," Bazazzadeh says.
Location, Location, Location
Another way to determine if renovating might be preferable to moving—and vice versa—is by thinking about the neighborhood you live in, says Lisa Torelli-Sauer, an editor at Sensible Digs. Torelli-Sauer says:
“Ask yourself: Is the property value in your neighborhood increasing? How attached are you to the area? Are there benefits of living in your area that you may not be able to find elsewhere, such as a great school district or a wide range of job opportunities?”
Consider the Potential Return on Investment
If you decide to renovate, the goal is to make you happy, no one else. But it’s also an opportunity to think about the future sale of your home, even if you’re playing for keeps for the time being.
“Concentrating on the shared areas is your best bet in increasing return on investment, even if you don't want to move,” says Brian Stodder of home improvement website Homewares Insider. “Investing in renovating your kitchen or living room will show more and add more value than simply redoing the bedrooms.”
Investing in renovating your kitchen or living room will show more and add more value.
One of the most popular shared spaces for renovations is the kitchen, which also has an impressive ROI. According to the 2020 Cost Vs. Value National Report, you can receive a return on investment of nearly 80 percent with even a minor kitchen reno.
Bathrooms are another easy place for ROI that can also make your day-to-day home life more enjoyable. Whether it’s a bathroom remodel or addition, the Cost Vs. Value National Report found that you’ll recoup about 55 percent of the cost when you decide to sell later.
But shared spaces aren’t the only spots to think about ROI.
“One of the least-used tricks is to make your backyard or garden presentable,” Stodder says. Other elements, like new siding or a new facade, make your home more eye-catching, which could help it sell faster.
What about a second-story addition?
If your home is on a small lot, you need more space, and you don’t want to move, a second-story addition might seem like the perfect solution. But, in almost all cases, it’s easier said than done.
“Large home renovations are not for the faint of heart. They require enormous amounts of time, energy, and patience,” Torelli-Sauer says. That’s especially true for second-story additions. According to Torelli-Sauer:
“Adding a second floor can be significantly more expensive than adding a ground-level addition. This is because adding a second story involves more deconstruction/demolition of your existing roof, pipes, and electrical work.”
Bazazzadeh agrees, adding that they’re not known for a big ROI. “Major additions like a second story usually won’t yield a high enough return to warrant additional costs,” he says.
Stodder says it’s also important to consider the type of building you live in, namely how old it is. “If the building is old, there’s quite a bit of risk involved in breaking down walls and adding new rooms,” Stodder says. “In some cases, however, adding a few rooms can actually increase the quality of living—as well as increase the price.”
Think About How Many Unknowns You Want
No renovation comes without its hiccups—but typically, renovations have fewer unknowns than a move. If you love your home aside from one small bathroom, renovate. On the other hand, if you dislike the community or have practical reasons to move (like a new job), you may choose to move.
It’s a highly personal choice that goes beyond just comparing costs, but we hope these points of consideration have helped you come to a decision.