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Deciding whether to remodel your home or move can be a hard thing to do, to say the least. Many people have understandable attachments to their homes, making it difficult to pack up and go simply. At the same time, certain kinds of renovations can be expensive and time-consuming, not to mention disruptive. In addition, you might need more resources to do the kind of remodeling you desire, so moving out might be necessary.
You can use this guide to help contextualize both solutions and weigh your own options accordingly.
Moving vs. Remodeling
Why consider moving out as an alternative to remodeling? Moving can be a more cost-effective solution depending on your lifestyle and budget. For instance, moving to a larger home could be the simplest answer if you’re looking for more space. On the other hand, sometimes you’ve simply outgrown the neighborhood you’ve been living in, and “moving on up” like the Jeffersons might be the most convenient (albeit taxing) route.
But remodeling has its own benefits to think about. Your house could already be in a valuable neighborhood, or your neighborhood’s value could be poised to increase in the near future. New urban developments and attractions could be in the works, and you could profit in the future by staying put in the present. Furthermore, remodeling can allow you to tailor your house to your exact needs, turning it into a personalized living experience for you and your family.
Doing one or the other could provide you with advantages and disadvantages, so it’s important to think about the full scope of your options.
Consider the Cost
Let’s say you’ve decided to go for the remodel. Your next step would be to consider how much you’re willing (or able) to spend. This will depend on what exactly requires remodeling and the amount of time, effort, and muscle you want to invest. If you like the idea of doing your own labor and are a crafty DIYer, you may save some money and carve out a project that’s uniquely yours.
Otherwise, the cost of hiring contractors and designers will add up quickly.
Now, if you decide to move out instead, that’s going to bring its own set of challenges. First, you need to take the time to find a house and neighborhood you’ll be happy with for the long haul. Moving fees, property tax increases, and new loan payments can add up fast, and you’ll have to weigh the cost of these against the potential benefits.
But no matter which route you choose, you’ll be doing a lot of research and price comparison. So careful planning now can save you a lot of trouble later.
How Much Does It Cost To Move
Moving brings its own challenges and costs that you’ll have to account for in your budget. It’s not the most accessible option by any means, but it’s doable if you plan ahead and consider all the potential costs.
Cost of Selling
Selling your home likely will be a cost; you’ll have to pay real estate commission, staging costs, and other expenses just to put the house on the market. Then, once it sells, you’ll have to pay more in closing costs and taxes.
>> AGENT ANSWERS: is my house worth remodeling?
As for the cost itself, it varies depending on the market, the condition of the house, and other factors. In general, you can expect to pay between 10% to 15% of the price your home sells for and any additional taxes. In addition, real estate agents will take in around 5% of the overall sale price, and you can expect to pay up to 1% for title insurance.
With all said and done, saving up some money is important before putting your house on the market. Make sure you have a budget and do your research to find the best deal. Having a good understanding of what you’re getting into will help make sure that the process goes smoothly once it begins.
Cost of Buying
You’ll have to find a good real estate agent, do the legwork of finding a new home, and then consider how you’ll pay for it. For example, if you plan to acquire a mortgage, you’ll have to factor in the cost of interest, points, and other fees. You’ll also have to pay for inspections and appraisals on the prospective properties you’re looking into and escrow fees when you make a purchase.
It can all add up fast, so keep track of your spending and adjust your budget as needed. Also, be sure to remember that your mortgages might overlap when you move, so you’ll have to pay for two at the same time until one or the other is paid off. You can also expect to pay up to 6% of the loan amount on closing costs, depending on the loan type, as well as additional fees for the appraisal and title insurance.
Cost of the Move Itself
You might have to foot the bill for wear-and-tear repairs on your house, especially if you’ve been there long and last updated the place a while ago. You’ll also need to find a reputable moving company and pay for their services unless you intend to haul everything out yourself.
How far you plan to move will also impact the move’s cost; for a local move, you’ll typically pay upwards of $50 an hour if you hire a professional team to assist you. But, of course, that cost can get quite high if you’re moving more than a few states away, so you’ll want to compare a few different quotes before you commit.
While moving isn’t cheap, there are a few ways you can save money. If you can do some of the heavy lifting yourself, opt for self-service moving. Renting a truck and organizing your own move could cut down on costs. You can also get a discount by scheduling your move on off-peak days, such as midweek or the off-season for moving companies. So give it some thought and schedule your move strategically.
How Much Does It Cost to Remodel
The average home renovation costs about $48,000, including labor and materials. But depending on how big of an overhaul you’re planning, it can easily climb to over a hundred thousand dollars. “Gut and remodel” costs will skyrocket if you’re replacing or adding plumbing, electric wiring, and other major utilities.
That’s not meant to discourage you. Only you can decide if it’s worth remodeling your home. However, you should know what you’re getting into and plan accordingly. Remodeling a house is a big investment, but the results can be incredible when done right and with care. That’s why you should have some idea of what to expect beforehand.
Permits for different kinds of renovation projects can be as little as $50 or as much as $2,000. And if you’re remodeling a large, complex space, it’s wise to hire a professional (which may cost up to $8,000 on average). Factor in the cost of labor (up to $150 an hour), and you’ll get a good sense of the overall cost of remodeling.
>> AGENT ANSWERS: Should I sell my house or rent it out?
Ultimately, it’s important to do your research, get multiple quotes and bids, and budget accordingly. It may feel daunting, but remodeling can be a great investment when done right.
Cost of the Remodeling Projects
Be realistic about what the renovation will cost. Your contractor’s estimate should be reasonably accurate, but it still needs to be guaranteed. Just think about all the issues that may arise: Unforeseen rot, building code changes, and a lot of other common (but aggravating) issues can inevitably come up during a remodel.
To avoid any major surprises, do your research and prepare to set aside more than whatever they quote you. Have a budget for:
- Materials and labor costs.
- Permits and fees.
- Demolition, moving, or storage expenses.
- Inspection fees.
- Any necessary equipment rentals.
- Contingency funds (just in case).
And remember to factor in the cost of your own time. You’ll be spending a lot of hours on this project, and your time has its own value.
Financing a Remodel Through Loans
Given the expenses involved in remodeling, you can secure some financing options to help pay for it. However, unless you intend to pay up-front, there’ll be interest fees and other costs involved that you’ll need to consider as well.
You should also decide how you’re going to pay for the remodel. Some of the most common options you might look at include:
- HELOC: You can convert your home’s equity into a line of credit that you can continuously draw on and pay back. It’ll work like a credit card you can access when needed.
- Refinancing: This would involve taking out a new loan and using the equity from your home to pay for the renovation.
- Home Equity Loan: This would involve taking out a fixed-term loan against the value of your home, which would be paid back over a set period with a fixed payment schedule.
- Cash Out Refinancing: This would allow you to refinance at an amount higher than the mortgage loan balance, giving you access to some of the equity in your home without selling.
Whichever option you choose, research all the applicable loan terms and conditions before signing. You want to make sure you’re getting the best deal you can when figuring out how to determine if you should remodel or move.
Will the Renovations Make Your Home More Valuable?
This is a complex question. Whether the renovation can increase the value of your home will depend on many factors, including:
- The current market value of homes in your area.
- Price appreciation trends over time.
- The type of renovation being done.
- The quality of the renovation work.
- How much money you have invested in the renovation.
- Whether the remodel was intended to increase resale value.
For instance, a major kitchen renovation could definitely make your home more attractive to potential buyers, while a costly structural overhaul — that leaves the home looking the same from the outside — might not make a vast difference. You’ll have to weigh your options and decide what makes the most sense for your particular situation.
3 Things to Think About Before Making the Decision
As you can see, this is a subject you want to invest great care and research into. How you decide will significantly impact the value of your home and the amount of money in your pocket for the foreseeable future. That’s why it pays to plan ahead and have the right information at hand before you go all in.
And it doesn’t all simply come down to objective, mathematical calculations. This is your home, after all. Your personal and professional lives alike are wrapped up in it, which means you’ll want to consider your own needs and preferences before deciding whether it’s cheaper to remodel or move.
Whichever way you go, you’ll need to think about some of the following:
1. Do You Have Any Emotional Attachment?
It’s hard to let something go that’s been in your life for years or maybe even decades. You may have a sentimental attachment to the home that’s hard to let go of, or you may feel responsible for it. Maybe you inherited it from a family member, and it has a special place in your heart, or perhaps it’s a reflection of many years of hard work and effort on your part.
Whatever the case, you can’t let emotion override your sense of practicality. Consider the pros and cons of both options to get a clear understanding of what’s best for you and your family. That’s not to say emotion should play no part at all in your decision. It just shouldn’t be the only determining factor.
Furthermore, selling your home is a good thing. It can be a great opportunity to make some extra cash, and it can free up your finances for other investments or projects. Think of it as an opportunity to find new beginnings in another home or area. You can use the money from selling your old home to find something better suited to your needs and lifestyle.
2. Real Estate Market: Is It the Best Time To Buy?
There are few things worse than buying or selling a home only to have the market shift shortly after. In other words, timing is crucial. First, you’ll want to understand the micro and macroeconomic environment around you, especially regarding their impact on the local real estate market. Then, it’ll help you determine whether it’s better to remodel or move out now.
Frankly, it’s only sometimes a good time to buy or sell a house. When the economy isn’t strong, prices can dip. So you could find yourself holding a bag worth less than what you paid for it. Remodeling can save you from that headache as long as you renovate smart and within your means.
One of the most important things to realize is that market fluctuations are cyclical. Prices will move up and down depending on the economic climate. If you’re alert to changes, you can time your sale or purchase to maximize your return.
3. Timing: Is It the Right Timing for You?
Just as the market has its own timeline, you have your own timeline, too. Your life, and the way it changes, can affect the decision you make. For example, if you’re planning to move in a few years, then it’s not worth investing in a big renovation right now, and it is the best time to move. But if you want to stay in the home for a while longer, investment in remodeling may make more sense.
Only you can define what “the right time” means for you. Weigh your options and what you hope to get out of your time — and your home. Whether it’s a few more years of comfort in a home you know, or cash in your pocket from a sale, the timing of your decision is just as important as any other element.
And just because it’s the “right time” to do something doesn’t mean you have to jump right in. Instead, take your time in researching and evaluating different options. Perhaps even talk to others who have been through the same process. That way, when it’s time to make your move, you’ll be able to do so with confidence.
Final Thoughts
Deciding whether to move out or remodel your home is a major decision. Both options have their advantages and disadvantages, depending on your individual situation. If you can’t decide between remodeling or moving out, consider all the abovementioned factors. Ultimately, it’s essential to make a decision that works best for you and your loved ones, both now and in the future.
No matter what you decide, you can always benefit from the help of a professional. FastExpert can help you find an experienced real estate agent in your area who can help guide you through your home sale or renovation process. With their help, you can make the best decision on your own terms and get the desired outcome.
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