Do I remodel or do I sell (and buy something already done)?
In some cases, "remodel" may mean "demolish".
My blog inspiration comes from my day to day experience as a real estate agent. I spent some time this weekend on both the west and east sides of Portland and found that many people were considering whether or not to remodel their current home or buy a different one.
It seems that a lot of Portland area homeowners are asking the age old question:
Do I love my home enough to sink a bunch of dough into it to make it my dream home or do I go out there and find one that's already been done for me?
Okay, maybe that's not an "age old question". It's definitely not a pithy one, either. But in one form or another, this is the question on the mind of many homeowners.
Deciding between a major remodel versus buying a new home is a tough call, but I'm here to help!
Let's work through some questions and see if we gain any insight.
DO YOU LOVE YOUR HOME?
This is me, throwin' out the metaphors.
If you're thinking about a major remodel, then you probably love your home. If you don't love your home, then I'll just go ahead and answer your question right now:
It's time to sell!
It's also time to find a real estate agent, have her evaluate your home to provide a value estimate, and formulate a plan to find a home you WILL love.
You can strategize with your agent about whether or not you'll need to sell your current home first, list it while looking for others (buy/sell), or find a new one first and sell the current one afterwards.
But that's a WHOLE other blog post...
If you DO love your current home, the area of town it's in, and the land that it sits on, then we haven't solved the conundrum yet. Read on!
WOULDN'T IT BE EASIER JUST TO BUY A NEW HOME?
This seems ready to go.
I'm a Realtor. So I guess I'm supposed to tell you that finding and buying a new home will be sooooo much easier than remodeling your current one...
I wish it were that simple. Finding a dream home isn't always easy. Inventory in Portland is still low (although we've had quite a bump recently, yay!). The process of getting approved for a loan, then identifying your REAL budget, coming up with a firm list of wants and needs, deciding what areas of the Portland metro would work for you, going out to look at various listings, navigating the somewhat crazy world of placing an offer (or offers), and going under contract... is difficult enough by itself.
Then you have to consider that you probably need to sell your current home, too. Oh, the joy of getting it all organized, cleaned, and show-home worthy, then keeping it that way (assuming you want to sell it before moving out) during oodles and oodles of open houses and showings. What fun.
Then there's the ever-present possibility that the dream home you have under contract has major issues like a crumbling foundation or big electrical problems or water damage, etc... Or the sellers go all hardball on you, refusing to fix anything or even offer a credit for major issues. Or it doesn't appraise high enough.
Etcetera, Etcetera
...
Nope, I'm not going to tell you that selling your home and buying another one is a lot easier than remodeling the one you've got. Remodels are messy, burdensome, expensive, and an all-around pain in the bee-hind. But finding a new house can be tough, too.
I WILL tell you that it'll be a lot easier to buy and sell with my help.
Yep, I'm still a Realtor :)
WOULDN'T IT BE MORE COST EFFECTIVE TO REMODEL?
When it comes to a major remodel, hiring the cheapest guys on the block probably isn't the best way to go.
We know that finding a new home, buying it, and selling your current one isn't a walk in the park. But, since you own your house, you've probably been through this process at least once before.
You can handle it.
However, wouldn't it be better and more cost effective to have your current home remodeled? At least that way you don't have to pay for all those closing costs. Amiright?
I can tell you that remodeling is not really more cost effective than finding and purchasing a new home, all things being equal (even considering the cost of selling the home). In very few cases will you fully recoup the costs of a remodel, and that's assuming you don't find any additional issues along the way that need to be fixed.
(If you're in an older home, it's virtually guaranteed that a big chunk of money will go towards updating wiring, plumbing, structure, and/or a whole potential host of other things.)
Check out the Cost vs. Value Report to find out if the remodel you're considering is worth the money. The link is for the Portland report, but you can go back and run it for any area of the country.
I'M FLUSH WITH CASH. WHAT SHOULD I DO?
But you're not remodeling the home to MAKE money. We're talking about remodeling it to turn it into your dream home. If you are flush with cash and truly love your current home, the land it sits on, and the area of town it's in, then you can stop reading right now.
Remodel it!
Unfortunately, very few us love our homes quite THAT much. For instance, if it's too small, and adding an addition isn't possible, then it's time to find another one. If the area isn't quite right (maybe you don't like that it faces north, or that there are no parks nearby, or the neighbor's rooster is turning you into an insomniac) then it's time to find another one. If you would REALLY like to have a backyard (or not have one) and the current home doesn't meet your needs, then it's time to find another one. If you're getting tired of stairs and want a single level, then it's time to find another one.
The list goes on.
STILL STUCK?
Hahahaha! Oh, sorry, my bad. Do you need some Goo-Gone?
If you're still stuck on deciding whether you want to remodel or purchase something else, you should consider the commitment of time and energy of both options. Finding a new home and selling your current one is a burden, but in this market it can all be overly fairly quickly.
A major remodel can take months or even years. It can seriously disrupt your life and your pocketbook. You should also consider how risk adverse you are. Unless you've done it before, a large remodel project involves venturing deep into the unknown, both financially and personally.
Read about how to estimate timelines here
In the end, many people that complete a major remodel end up selling within a couple of years!
I'VE CONSIDERED ALL THOSE THINGS AND I WANT TO REMODEL!
Not until the work is done, Mr. Contractor!
Remodel budgets are usually pretty hefty and require lots of ready cash and a big contingency fund set aside for those unknown issues you'll find along the way.
Read 10 Remodeling Tips from a Pro Contractor
If you've got lots of home equity, you could potentially take out an equity line of credit or do a cash-out refinance and use those funds for the remodel. But those darn banks like to be paid back. So consider whatever the new payment will be after you use the funds, and consider that equity lines of credit start with variable rates. Many of them have options to lock the rate, but the locked rate is rarely as low as the variable, and rates can easily rise during the remodel process.
If you have some equity, but not a ton of it, then you'll need plenty of cash funds for your remodel. If you don't quite have the money yet, then staying put for awhile to build additional equity and liquidity is the way to go.
Your first steps should be to find several general contractors and interview them. If we're talking a major remodel, or you want high end work done to the home, then start looking for architects.
I highly recommend using Houzz. This is a great website/app where architects, builders, and homeowners get to showcase their work. You can save photos and articles, make notes on them, and interact with members of the Houzz community. Once you've compiled a bunch of pictures that you like, it's easy to hand them over to your designer/architect for inspiration!
I'VE CONSIDERED ALL THOSE THINGS AND I WANT TO FIND A NEW HOME!
Well then, get in touch with me and let's get started!
