Should You Remodel or Relocate? | How To Manage Money Tips

Posted by Money Tips Staff

Homeowners who are outgrowing their space or require some other sort of upgrade are often faced with the same dilemma. Does it make more sense to remodel or relocate? It?s not an easy decision. Choosing to remodel often means months of working around an uncomfortable living situation, and the chance that something going wrong extends the budget and the time frame of the project. But relocating means uprooting your kids from their school, moving further from work or having to find a new job, and battling a terrible real estate market with the hopes of getting what your house is actually worth. There may be reasons pulling you in both directions, but how do you decide? Here are a few elements to look at when choosing between remodeling or relocation.

The first thing you need to do is create a full assessment of your current situation. You shouldn?t make any plans in either direction before reaching out to an appraiser or real estate agent to craft a comparative market analysis. The CMA will determine what your home?s potential listing price could be, the actual selling price of similar homes in your neighborhood, and how long those homes stayed available on the market. You?ll need this before determining if relocation is truly a viable option.

Once you?ve got that information in hand, it?s time to consider the remodel project in full detail. Your best bet is to bring in a few different contracting companies and ask for estimates for the work. You may be able to price it out yourself using the internet and several guidebooks, but a licensed contractor with a long track record will be better equipped to asses the job in detail, and alert you of any pitfalls that could eventually increase the final bill.

Now that you?ve got these two figures, you can pit them against each other to choose your path. If the value you could get for your home in the real estate market is less than the current estimated value of your house added to the proposed budget for the renovation, it probably makes sense to move. But if the two figures are equal, or close enough that it doesn?t matter, then how do you choose? In many cases, it comes down to personal taste and a gut feeling.

There is a strong case to be made for remodeling. If you?ve been in your home for a while and enjoy living there even despite the necessary upgrades, that should be a factor. A new, fancier house won?t make you happier if it takes years for it to truly feel like ?home?. The neighborhood should also be a consideration. If you?ve become friends with your neighbors, are deeply involved in the community and love the school system, those are all compelling reasons to stay. Basically, if the things you love about your home outweigh the things you want to change, remodeling makes a great deal of sense. Moving means you could change out one problem for another, or discover a whole host of additional faults after you?ve moved in and it?s too late to go back.

There is also a solid case to be made for relocation. Not everyone will have the temperament for a remodeling project. If you?re trying to save money by doing it yourself, you should expect it to take longer than expected, and probably cost more. Additionally, will the remodel solve the problem, or just put a band-aid on it? If you?ve got issues with your home that go beyond a remodel, such as too small a yard, an unsafe neighborhood or a long commute, it won?t be worth spending the money. You can buy all the king bedroom sets and marble countertops you want, but a home that doesn?t fit your needs won?t fit any better after a lengthy remodel.

Tagged with: contractor ? Money Tips Staff

Filed under: Home Finance & Insurance ? Personal Finance

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