HGTV has a popular reality series called “Love It or List It.” The show features homeowners who can’t decide whether to remodel and stay in their home or sell it and move. Helping them make the decision is a real estate agent, who is in favor of selling the old place and buying another and a designer who is determined to show homeowners that she can transform their worn-out house into a castle they can love. Like most of these reality shows, it is more entertainment than documentary.
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This year more homeowners than ever before will decide whether to stay or go. During the last few years most didn’t have the option. Homes were either over-mortgaged or too far under-valued. Why sell if there wasn’t enough money left over to buy another home? Remodeling was another decision that most homeowners postponed. When property values were dropping like a rock, few homeowners were going to spend serious money on remodeling their home when it was either underwater or not worth what they had paid for it. And if a homeowner did decide to remodel, good luck finding a home improvement loan.
This year will be different. The economy appears to be in long-term recovery and most folks feel more secure about their job. Property values jumped 30 percent last year in our county and are expected to continue increasing, albeit at a much slower pace. The warm winter and likely early spring will have many homeowners weighing the pros and cons of should I stay or go?
It’s a conundrum. When considering moving the obvious questions are: Where to move? Can I afford it? How will the family adjust? On the staying put side the questions are: What would be the extent of remodeling? What are the costs? How much would it increase the value of our home? Can we afford it? In addition to resolving the financial questions are emotional issues about leaving a home full of memories. What effect will the move have on the kids? Will we like the new neighbors? All the questions can be overwhelming. They will also be different for every family since every situation is different. If you or someone you know is in a quandary about staying or moving, consider the following before calling your agent or home remodeler.
If you don’t like your neighbors or neighborhood, move. Life is too short to live in a place where you don’t want to be. It’s better to have a modest home in a quality neighborhood, than a luxury estate in a place you hate. If listing, don’t get greedy. Peace of mind is priceless. Take a reasonable offer and start packing. However, often people who complain about their neighbors will discover they have similar issues with the new neighbors. Make sure you’re not the problem.
If the size of your home is affecting the quality of your life, moving is generally a better option. While the size of the family and possessions most likely evolve over the years our homes don’t. That cute starter home that a young couple fell in love with 10 years ago is now an overstuffed collection of toys and tricycles. Privacy is nonexistent with too few bedrooms and baths. The stress from over-crowding increases tension levels. A larger home may be more expensive but worth the sacrifice to maintain harmony in the family.
There are circumstances when it makes more sense to add square footages or change the home’s design and stay put. Perhaps a homeowner has made substantial improvements to the property such as landscaping or a pool. When the home’s location is very special and it’s located in a quality neighborhood, then it’s time to call the remodeling contractor and not your agent. If a space problem can be solved with a $25,000 room addition, that’s likely less expensive than incurring the selling expenses of the old home and the moving and new loan costs of buying a larger one. Any architectural change should be consistent with the neighborhood and, when completed, the home’s value should not exceed 25 percent above the neighborhood median selling price. Don’t end up with a $600,000 home in a $400,000 neighborhood.
When considering increasing the size of the home, the lot would need to be large enough to accommodate a room addition and if there is a homeowners association, its approval may be necessary. Typically, there are substantial cost overruns in remodeling and living through a home remodel will be stressful. Before deciding on the remodeling option, I suggest you revisit a 1986 movie called “The Money Pit” starring Tom Hanks and Shelly Long.
When choosing a room addition, keep in mind the cost will rarely produce a corresponding increase in value. According to a recent study by the National Association of Realtors, a $50,000 room addition will likely only increase the home’s value $35,000. The remodeling cost for a kitchen or bath will increase the home’s value about 50 percent of the cost.
Generally, listing and leaving is better than staying and remodeling. Usually, a one or two room addition doesn’t solve the space issues and remodeling one or two rooms highlights the dated design of the other rooms. No major remodeling projects should be considered if the homeowner will only remain. in place less than five years. Now, go ahead and make that big decision.
Ken Calhoon is a real estate broker and can be reached at [email protected]