Home improvement projects can range from a simple wall paint color change to an elaborate kitchen renovation. While remodeling can make your space more enjoyable to live in, you risk pricing your home out of the neighborhood. Before entering into any home improvement project, consider your return on investment. It might be more advantageous to move to a different property than to improve your current one.
The answer is never black or white, but we’ve listed the variables that need to be weighed carefully. Your personal finances and the status of local markets are just two issues you will have to consider. Also, think about which improvements give you the most bang for your buck.
Before taking the leap either way, here are some factors to consider:
Thoughts on Selling
- Current market conditions. Is your area flooded with homes for sale? What is the transaction time from listing to closing? Is the market lopsided with more sellers than buyers?
- Local factors. Are there new jobs coming to your city or are companies moving away and jobs decreasing? Will there be an influx of new residents or is everyone trying to sell quickly? Will new jobs bring higher incomes or is downsizing a problem?
- Your home value. What is your home’s worth? Can you extract from it what you paid or will you sell at a loss? What is the lowest offer you can accept? Will you be able to offer any help with the closing costs?
- Personal logistics. Can you afford to move to a new house while paying the mortgage and other costs on the first, or do you have to sell first and then move? How long can you continue to pay the mortgage, taxes and insurance on this property?
Insights into Renovation
- Current market conditions. Will increasing your home’s size or features price you out of the area? Sometimes putting in high-end finishes can make your home worth more than what it will appraise for.
- Local factors: Are buyers looking for homes similar to an upgraded version of yours in that area? Don’t create a forever home when buyers move to your area for a starter home. It will be hard to make a profit this way.
- Your home value. You can quickly put in too many renovations and create a home that is worth more than what the area dictates. Take that into consideration when planning your remodel.
Personal logistics. If you ever plan to sell, these are things to consider. However, if you feel that you’ll stay in your home for years to come, improving your property might be a wise move.
There is no magic formula for determining the right next step for you as a homeowner. Contact me if you would like to discuss your best options in our current market and in your specific location.