Should You Sell or Remodel?

In this tough market, just the thought of putting a home up for sale can make some homeowners hoping for a new space uneasy. “Selling takes time, energy and often a good amount of money. Some people who might normally sell their home and look for a new space, whether they are expanding their family or looking for a fresh start, are now remodeling instead,” says Connie Ray, President/Owner of Coldwell Banker Platinum Partners. When deciding if you should sell or renovate, there are a few key things you need to consider.

To begin gauging your situation, take a look at your location. Do you love your neighborhood? Are you near great schools or already involved in a tight knit community? “If you love your location, you may want to consider remodeling instead of selling your home. You don’t want to risk moving to a place you aren’t as crazy about,” says Ray. Adding an extra room for a home office, guest room or that baby on the way may be all you need to make your existing home a better fit. However, even if you love your neighborhood, taking a look at your finances will allow you to make a more confident decision, Ray notes.

Calculate the cost of repairs and home improvements that it would take to get your home in top shape for selling. “Get a professional inspection to give you a better idea of what needs to be done, consider making green updates like an energy-efficient roof or windows, and check out if you are applicable for any tax breaks,” suggestsRay. If you would be spending nearly as much making improvements for selling as you would on your dream renovation—hello, new kitchen—then perhaps staying put is best.

“If you are on the fence financially about moving or renovating, don’t forget to factor in closing costs, which can be anywhere between 7 and 10 percent of your home’s sale price,” warns Ray. This can come from real estate commissions, property taxes, mortgage penalties and more. Also weigh in the housing market—if you’re considering moving to a place where the cost of living is much lower, then that might make selling more appealing.

“Also, be sure to do your research to make sure you can afford a new mortgage on a new property. Make sure you can secure a mortgage that works with your financial situation before selling your house,” says Ray.

After you compare figures and crunch numbers, take a look at your goals. Are you happy with your job or do you think you might want to look for a new position in the next five years? If so, it might be best to hold off. Already have kids? How old are they? If they are in their teens, staying in your home may be smart, as you can downsize if necessary once they are out of the house. Are they young? Maybe a new location is a good idea, before they get comfortable in their school and social setting. “Look at your lifestyle goals for the next 10 years before making a final decision on remodeling versus moving,“ cautions Ray.