Have you seen the HGTV show, Love It or List It? In the show, a design and remodel team works with the featured homeowner to renovate their existing home, turning it into a space that is functional for their current needs and meets their design expectations. While renovations are taking place, the homeowners meet with a real estate agent to view other homes that might better fit their needs and desires. In the end, the homeowners are left to decide: Love it? Or list it? Will they stay in their existing, newly renovated home, or sell and move to a new home?
While you may not have the opportunity to appear on a show such as Love It or List It, you may find yourself in a similar situation. Is it worth it to renovate your current home, or is it in your best interest to sell and move into something different? How do you decide?
It’s difficult to find the perfect home, one with just the right amount of storage, the ideal layout and all the room your family needs. Most homeowners have at least one thing they’d change about their home. If that something is within the four walls of the home, a renovation may solve the problem. However, if it’s a matter of location, the size of the yard or the length of your daily commute that has you feeling discontented with your home, selling might be your best bet.
If you’re weighing your options between a home renovation project and selling, here are some questions to ask yourself:
What is real estate market in your area like? If there are for sale signs in every other yard on your block and neighbors seem to be making a mass exodus, you may find it difficult to sell — or at least to get asking price for your home. An oversaturated market tends to drop home prices and make it more difficult to sell quickly. On the other hand, if the market is competitive for buyers, meaning there are more buyers seeking homes in your area than there are homes available, now just may be the perfect time to sell.
What is the biggest issue you have in your home? Is it the clutter and lack of storage space or a serious problem like a cracked foundation or a roof that needs to be replaced? Maybe your family is growing and you no longer have enough bedrooms or bathrooms to allow your family to live comfortably. Some points of discontentment may be easily and affordably resolved with a renovation. Consulting with a designer and/or a home organization expert may help you get to the bottom of the clutter and find creative ways to add more storage to your home. Even a larger problem, such as foundation woes or a leaky roof may be covered by your home warranty or homeowners insurance. Identify the biggest problems in your current home and seek out professionals who can give you an expert opinion on how simple and affordable (or not) the remedy can be.
How long have you been in your home? Most experts recommend staying in a home a minimum of three to five years before selling in order to break even. If you’re hoping to make a profit off the sale of your home, you’ll likely need more equity than you can accrue in just a few years. Three to five years allows time for property values to improve and gives you time to build enough equity to cover some of the expenses of selling, such as closing costs and moving expenses.
Are you really ready for a renovation? Not only can it be time-consuming, but depending on the scope of the project, you may need to find temporary living arrangements while your home is under construction. The realities of renovations aren’t always considered into the decision. In addition, renovations can be costly — often costlier than originally estimated. To ensure you have enough to cover the project, boost your budget by 20% of the estimated cost to make room for unexpected expenses.
How does your home compare to others in the neighborhood? Do you live in the biggest home on the block or is your home relatively comparable to your neighbors’ houses? Your real estate agent can run a comp for you to show how your home compares to others in the neighborhood. Should you choose to renovate, and there’s a chance you will still sell in the future, it’s important not to over-improve your home. Making renovations that outpace other homes in the area means you’ll be less likely to recoup those costs when you do sell. Upgrades to the kitchen, bathrooms and landscape, as well as new carpet or flooring and paint are generally wise investments to make in your home.
Have you outgrown your space? If you’re feeling cramped in your space and splitting one bedroom into two, or knocking down or extending the walls of your common areas just isn’t an option, then selling and buying a larger home is probably your best bet. Meeting with a contractor can help you determine if expanding your existing home is an option and a wise investment.
No matter how much you enjoy shows like Love It or List It, remember that this isn’t TV, it’s real life. Take time to weigh all your options before making your decision to love it or list it.
Whether you decide on a home renovation or are ready to start the hunt for a new home, PrimeLending has home loan options to fit your needs. Check out our guide to financing a home renovation to learn about the loan options available for remodeling and renovations. Contact us today to speak with a PrimeLending home loan expert in your area.