Sooner or later, many homeowners are faced with the decision of whether it is better to remain in their existing home, or if they should move and purchase another property. While this decision is ultimately a personal choice, there are several factors one should consider when making this decision. The aim of this article is to assess the pros and cons of each option. Renovations/Expanding If you are looking to upgrade or expand your existing home for your own needs and you have no expectation of immediate financial returns, then the benefits are clear. The end result—if all goes well— is that you will be living in a modern, comfortable space that you and your family will continue to enjoy. It is important to understand from the onset, however, that home renovations often exceed both preliminary budget and time estimates. In many instances, unexpected upgrades/improvements need to be carried out. For this reason, it is very important to obtain detailed written quotes from your contractor, but understand that these numbers may still change. In the Mississauga home where I currently reside, I made significant renovations and allocated both a fixed amount of time and money for the project. In the end, the renovations considerably exceeded my budget and took several months longer than I first expected. It must be clear to anyone considering renovations that, as any project commences, there are many opportunities to further upgrade.
These upgrades equate to escalating costs. Also, when deciding to renovate, you should also consider the inconvenience of living in your home as the work is being completed. This can be particularly inconvenient when you have children in the home. Depending on the nature of the work, the owner may be required to move out during the renovations. On the other hand, certain upgrades do make homes more saleable (and insurable). Some homeowners with older properties feel the urge to renovate their home or upgrade to take advantage of the durability, lower maintenance, and energy efficiency of modern building materials and techniques. For example, upgrading knob and tube electrical wiring (commonly found in some older homes) to copper wiring, will have a positive impact on the marketability of your home. Converting your home to natural gas heating from propane heating, or adding another bathroom so the home has two, or upgrading to hardwood flooring, to name a few, are all renovations which can make your home more saleable. As a rule of thumb, if, after completing all the anticipated renovations, the value of your home does not significantly exceed that of others in the neighbourhood, then the renovations may be a viable option. Be very careful not to over improve your home based on the location of your property.
You do not want to be the most expensive home on the street. A home that is valued significantly higher than the neighbourhood average might never give you a full return for your investment. In my business, I am often asked for advice by my clients on home improvements that they are contemplating doing. I always tell them that I place significant weight on the value of neighbouring homes. If you are considering major renovations, I highly recommend you have a reputable realtor/appraiser render their opinion on the improvements/upgrades being considered. Moving Up If you are looking to move from your existing home, then there are a number of issues to first consider. Some of the reasons individuals decide to move to another home include: * Better schools/parks/facilities * More living space (such as more bedrooms) * Larger yard/garden * Newer home features – such as higher ceilings and an open concept floor plan If you decide that your current living space is inadequate and you conclude that moving is the best option, then there are other factors to consider. In addition to the purchase price of your new home, it is important to understand there are additional costs when you buy and sell real estate. When you are selling your existing home, you will incur the following costs: real estate fees, legal fees and, possibly, a mortgage discharge fee. Then, when you are buying your new home, the following costs need to be factored in: legal fees, land transfer tax, moving costs, and perhaps even costs to redecorate or furnish your new home.
Additionally, if it is a brand new home you will have new home warranty charges and various other incidental charges (the builder should give you a breakdown of all the anticipated costs). It is also important to get an accurate assessment (value) of your current home’s worth before you sell it. Questions you should have answered before putting your home on the market include: * How much will you net as a seller? * How much do you want to spend on your next home purchase? * Within your desired price range, are their suitable properties that meet your requirements? * Have you reviewed your financing options? For example, is it better to blend and increase your mortgage or is it more beneficial to break your mortgage and commence a new mortgage? An experienced realtor will be able to carefully analyze your particular needs. Each of these decisions of whether to renovate or upgrade versus buying a new home has advantages and disadvantages. I hope this article has help shed some light on the merits of each option.