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IMPROVE OR MOVE? That’s the Question!
By homejack | March 17, 2008
Many people are in a quandry? What should I do? Should I spend money on a remodel or should I sell and move to another property? The answer can be complicated.
Today’s fairly stable, reasonable interest rates play an important role in the decision. Also to be considered is the neighborhood as well as the city in which you live. Is the neighborhood growing, stable or declining? How does my home compare to the others in the neighborhood in regard to size, condition, overall repair and curb appeal.
Is the inside fairly current or is it completely outdated? What is the condition of the appliances, the electrical, plumbing, heat and air systems?
Does the style of my home match others in the neighborhood or is it an oddball? The only 2-story house on the street filled with ranch homes. The only vinyl-sided house among brick veneers? The only one with a pool? What is the real estate climate in my city and my neighborhood in particular?
Most home repairs and improvements will not return the investment made. Even the most appropriate major improvements will need at least two or three years before they will return their full cost.
Remodeling Magazine’s 2006 report of job cost to resale national values for mid range homes was3.4% to 87.2%. This includes remodels (bath, kitchen, attic, basement, home office), additions (bath, family room, master suite, sun room, two story, deck) and replacements (roof, sidiSo, what’s the bottom line?ng and windows).
In fact, many improvements and renovations will actually reduce the value of your home as well as the ability to sell it. Never make improvements that will increase the value of your home more than the most expensive one in your neighborhood and certainly not on your block.
So, what’s the botom line?
Well, again, the answer is not clear cut. Have you outgrown the home and desperately need more space? How will your home compare with the neighborhood after an addition? Chances are, if your house seriously fails to meet the needs of the family, one should think twice - and carefully - before jumping into a major renovation or addition.
Considering the decision from an investment standpoint, rarely do major improvements make as much sense as selling the present home and buying a home that is carefully chosen which will closely match the needs and wants of the family. Also playing a role in this decision will be the children’s school zone, distance to work, shopping convenience, neighbors and family.
If major improvements such as room additions, total replacements of baths and kitchens don’t pay off in the near term, we are left with this fact:
If your decision is to sell and move now, small and relatively inexpensive changes are to be used to make the home attractive to buyers, not major improvements or total replacements that involve major expenditures.
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