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Remodel or Move

When folks are considering remodeling, the question that often arises is should we stay and remodel, or should we find what we want and move.

Lets assume your home is a 3 bed, 3 bath, 2,100 square foot home.  You would like to add another bedroom and bathroom because one of your bedrooms is small and is being used as an office.  The size of this addition would be about 200 – 250 square feet (bedroom, closet, bath).

Several factors to consider:

  • Costs of moving, inconveniences, neighbors.

Costs:

  • Listing and commission costs.  Showing your home.  Moving costs.  Fix up prior to selling.  Buying new furniture for new home.  Typically 6% of the home’s price.
  • Surprises – you know what you have now, but what are you getting?  Even a good inspection will miss something, we see often (see this post about shower).
  • Packing and moving costs: we called Chris Borchers who is the manager of Crosstown Movers (many of our clients have used and have great things to say), and he states that a 2,000 square foot home will cost about $1,560 plus materials estimated in the $400 range.  This includes packing up the contents, loading onto truck, and unloading at new home – but not unpacking (you get to do that…);
  • Larger house, more property taxes.
  • Larger house, more operating costs – insurance, gas, electrical, landscaping, etc…
  • Other fees – closing costs, change in address,
  • Fixing up existing home for resale, estimate $2,000 (can vary widely);
  • New furniture/appliances, blinds, etc.  for new home, estimate $2,000.
  • Neighbors, school district.  One level home.
  • Depending on situation, home equity may be eaten up in new purchase.

From Qualified Remodeler:

RemodelOrMove.com’s U.S. Homeowner Sentiment Report for Spring 2011 reveals that homeowners who are interested in remodeling or expanding their homes have limited options. Of the 5,000 homeowners surveyed, today the average amount of home equity is $106,000 compared to $176,000 in 2009. This trimmed equity is partly due to a reduction in the average home value from $302,000 to $281,000.

If a homeowner moves, the report showed that the new home that meets their needs will cost, on average, $428,000. This is $145,000 more than what they could sell their current home for. On the other hand, the remodel cost estimate is approximately $100,000 to make similar improvements to their existing home. “To remodel or move has always been a difficult decision for homeowners,” says Dan Fritschen, founder RemodelOrMove.com. “This most recent survey reaffirms that both options could cost the homeowner more than $100,000. The calculator on our site can help homeowners to quickly gather information on renovating and moving and then make a recommendation which is best for an individual’s situation.” Fritschen adds that anyone who is considering a move or remodel should work with a real estate agent who can give them three key data points: an accurate estimate of their home’s value, the amount their home could appreciate as the result of a remodel and the price of a different home that would meet their needs.

So, what changes do homeowners want to make if they remodel or move? The Spring 2011 report includes the following data:

  • 57 percent report that they would like to have at least one additional bathroom;
  • 49 percent would like a kitchen renovation;
  • 46 percent are looking for more bedrooms; and
  • 44 percent would like a bathroom remodel.

While home expansion and renovation is on many people’s minds, the majority in the survey reported that they are very satisfied with local schools, their home’s location and neighborhood.  A detailed report is available here.