Should you MOVE or IMPROVE?
Last night I met with a couple interested in moving to a larger home from their four bedroom, two-and-one-half bath, split level. Their main motivation for wanting to move is one of square footage; they’re interested in bigger bedrooms, a larger living room, and more kitchen space.
This couple also expressed some valid reasons they may not want to move: They love their lot, they love their neighbors, and they appreciate the privacy their location offers them. So what to do? I told them I understood their quandary and assured them I would give them information to help them decide, even if it meant helping them stay right where they were.
Transaction costs associated with buying and selling real estate can be significant and should always be a consideration.
Transaction costs consist of taxes charged to a buyer or seller for transferring the real estate, the commissions involved, and any other inspections costs that go into the process. Plus, there’s a tremendous amount of time that goes into preparing your loan and getting all the way to settlement, then making the big move.
Moving, I believe, is somewhat overrated. Often, buyers think it’s going to be quicker and easier if they go buy another house when actually, adding to the existing house makes more sense. Why? For one, you can continue to live in your existing home while you add something to it; you don’t have to change your day-to-day living arrangements. Additionally, you save those real estate transaction costs by staying in your existing home, you know who your neighbors are, and you know what’s around your home. If you’re considering adding on, here are some things to think about.
If you add on to your property, will your post-project resale value cover your improvement costs? There are two theories touted by real estate trainer, David Knox, regarding the influence of surrounding properties on your home.
The theory of regression says that if you have a larger house surrounded by smaller houses, then your value is held back by that, which would be your concern when adding on to a property where smaller homes are in abundance around you. On the other hand, if your home is small and you’re surrounded by larger ones, putting an addition on may in fact improve the value well in excess of what you would spend on that addition. This is the primary consideration when you think about adding on.
If you can’t justify the return in value through a larger sale price, you may want to think about biting the bullet and selling your existing home once you find the right house for you. Finding the right house involves identifying what you love about your current home, as well as what you’d change if you could. Every home is a compromise to some extent, so no home will be perfect. If you can attain 95% of what you want by identifying a home that feels good to you, in an area that you like, maybe with high-ranking schools, a nearby park or large rooms – whatever is important to you – and the additional monthly cost is something you can bear, perhaps the time has come for you to move instead of improve.
For more information on returns on investments when you’re making modifications to your home, check out my Market Ready Guide at www.ericstewartgroup.com, or call us anytime with any questions you might have.
About Eric Stewart
Eric Stewart started his real estate career in 1987 and each year he and his group sell over 150 homes in DC, Maryland, and Virginia. The Eric Stewart Group has completed more than 3,000 real estate transactions, placing Eric in the top 1% of Realtors® in the nation. With a comprehensive approach to marketing and a knack for negotiation, the Eric Stewart Group has built a reputation of trust and tireless persistence throughout the area.