Family situations are dynamic. Additions to the family, or a new hobby, may mean that you need to upgrade your home. This prompts the question – should you move or renovate?
Both options bring hassles. As a person who has both moved and renovated, let me assure you that both create major disruptions in your lifestyle. However, my suggestion is to renovate if possible. Selling one home and buying another could cost you nearly 10 per cent of the price of the new home. If you sell a home for $600,000 (this is in aussie dollars not USA) and buy another for $900,000, you would be looking at close to $90,000 in expenses such as agent’s commission, legal fees and stamp duty, loan fees and removalist fees. That is a huge loss of capital.
Will remodeling add value to your home? Contact the appraisers at www.scappraisals.com for your home valuation questions>
If you renovate, the main danger is overcapitalising – this means you spend so much on your home that it becomes far more expensive than the rest of the houses in the street. You can avoid this by asking an agent to give you an appraisal of your home’s value to see how it compares with those around you. If its price today, plus the renovations, does not exceed the average price in the street, overcapitalising should not be a problem. Let’s assume your house is worth $600,000, and the average price in the street is $800,000: you could safely spend $200,000 in renovations. That’s just over double the non-productive costs of moving house.
You already know how to buy a house, so let’s focus on the steps to successful renovating. Once your budget is clear, get a building inspection on your property to ensure it is structurally sound and capable of being renovated, and a survey to ensure the boundary pegs are in the right position. All too often, we hear of renovations that have encroached on a neighbour’s property.