When it comes to major home improvements, there’s a lot to think about, like budget, scope, timeline, and more. Once you start turning over these questions in your mind, it can be tempting to simply ask yourself, “Should I Move or Remodel?” Here are 4 important factors to weigh before making that critical decision.
A home remodel is be a big undertaking. Along with financial considerations, you’ll also likely be living in a construction zone for a few or several weeks. You start wondering whether it would just be easier, and more cost effective, to pick up and move to a new place.
Here are some ways to help you make a more informed decision, starting with the budget. The true cost of your home remodel may surprise you!
1. Determine a solid construction budget
Big home remodel projects are best done alongside experienced professionals. So your first step should be finding the right design/build partner to work with — one that understands your vision, can recommend realistic ways to achieve it, and whom you feel comfortable working with.
You also want to make sure they have a robust, customizable budgeting process. Your project will be unique to your home, so the budget process should reflect that.
Also, be wary of firms that want to jump to design drawings right away, before the numbers have been looked at in detail. That route runs a high risk of coming up with a design that could look good on paper, but may ultimately be significantly out of your budget’s reach.
Digging into these numbers properly beforehand can help you get an accurate idea of what your construction costs will be, and help avoid unpleasant budget surprises later on.
2. Calculate your true remodeling costs and the added value to your home
Once you have a firm idea of your upfront construction costs, you can start to figure out the true cost of your remodel — or what that added value to your home will be.
Whenever you do a remodel, you immediately enhance the value of your home, but often not to the extent that you totally recoup all of your remodel costs. On average, for a kitchen or bathroom remodel, you’ll recoup about 70%-80% of the costs right away.
The remaining 20%-30% are your out-of-pocket costs. The longer you stay in your home, the more of that you will ultimately make up. But it’s that 20%-30% figure that will help indicate your true remodel costs.
Here’s an example of how to determine your true remodel cost, assuming an in initial project cost of $150k.
We’ll take a look at how this number stacks up against your moving costs in the next section.
3. Figure out all of your moving costs
The true remodel cost is the figure you want to use when comparing against your cost to move. But how do you determine what your total moving costs will be? Here are the primary ones to keep in mind (percentages are based on the value of your current home):
“Known” moving costs
- Commission: roughly 6%
- Taxes, attorney, and real estate fees: 2-4%
- Minor home improvement: $4,000 (cleaning, painting, landscaping)
- Moving costs themselves: average of around $2,000 for a 4 bedroom home
“Unknown moving costs”
- Possible temporary housing if you can’t time the move from one property to the next perfectly
- Additional mortgage: if you move into a new place before selling your current one; or if you’re forced to stay in your current home longer than you want as you need to sell it before buying another (most sellers typically have an overlap of about a month and a half when they’re still paying their existing mortgage)
- Post-inspection repairs for your home and the new home
- Credits towards closing costs for buyer
All of these costs add up. On average, moving will cost you about 7%-15% of the value of your current home. So if your home is worth $600,000, your moving costs may be as high as as $90,000 ($600k X 15%)!
Compare that with the true moving costs of $37,000 that we outlined above and you can see how analyzing the numbers can really help you make a more informed decision.
4. Gauge your tolerance for “moving headaches”
Our last factor combines both the financial and emotional costs of moving.
Moving headache scenario 1: Having to do a spendy remodel in the new home
We had a client recently who bought a home for more two million dollars. It had a beautiful kitchen, but it turned out the layout was not non-functional for them. They ended up looking at another $250,000 to remodel the kitchen to fit their needs.
Since you’re often not able to live in your home before you actually move in, sometimes big issues like this aren’t caught until it’s too late. That’s why we recommend to our clients considering a move that they spend as much time in the new home as they can, to really get a feel for what works and what may not.
Moving headache scenario 2: Big items missed in the new home inspection
Most inspections will catch minor issues that should be resolved prior to purchase, like electrical panel problems, small areas of dry rot, places around windows where moisture may be getting in and so on. But many times, they won’t account for larger ones.
For example, most inspectors aren’t trained as structural engineers, so they may not know what to look for when it comes to structural issues and the extent of how problematic they may be. If those become more apparent after you move in, you could be looking at some hefty repair bills.
Moving headache scenario 3: Air quality health risks
Typically, your inspector should be able to give you an idea of the condition of your crawl space and whether there are any factors that could contribute to poor air quality inside the home. But sometimes true issues can be hard to determine until after you move in.
Usually everything has been moved out of the home prior to you living there, and it can smell a little musty. If that musty smell turns out to be something like a large mold problem or something else water-related, that could lead to expensive clean up bills.
What “new” headaches are worth it?
You most likely know what the issues are with your home. After all, if you’re considering a remodel, you’ve already identified some that you want to fix.
Now that you know a few of the potential of the headaches of moving, you can ask yourself whether you want to trade the those you know about for new ones that have yet to be discovered.
Are you thinking about doing a remodel and aren’t sure where to start? We’re happy to discuss your project and help you make an informed decision that best meets your needs. Simply schedule a conversation with us!
For more ideas on how to help plan and budget for your next remodeling project, check out: