Improving Your Home Might Make More Sense Than Selling And Buying


Improving Your Home Might Make More Sense Than Selling And Buying
By Scott Rogers • May 31, 2023
Let's say your current home doesn't work quite as well for you now as it has in the past. Perhaps you need more room, or a room on the main level, or perhaps you'd like a nicer (newer) kitchen, or deck, or flooring, etc., etc. As a result, you may be faced with a decision of whether to improve your current home (to make it work better for you, or so that you like it a bit more) or to sell your home and buy a new one. Perhaps the improvement(s) you would make would cost $100,000. Yikes! That's a lot. Your next question may very well be whether you will see a $100K increase in your home value -- and the answer is -- probably not. Most home improvement projects do not increase the value of a home by the total cost of the improvement. Perhaps the $100K improvement would only increase your home value by $50K. Hmmm... maybe you should sell your home and buy a new one instead to avoid losing the $50K difference between the improvement cost and the increase in your home value? But... maybe not... let's take a look at why it might make sense to stay and improve your home -- despite not recouping the full cost of the improvements via an increase in your home value. For this fictional example, we're pretending you own a $450K home and you might spend $100K on improving it, after which time it will be worth $500K. It may be tempting to sell your $450K home and buy a $500K home to avoid losing that $50K difference between the improvement costs and the increase in your home value. But... don't forget these costs of selling and buying... $24,000 = approximate transactional cost of selling your $450K home $15,000 = approximate transactional cost of buying the $500K home $11,000 = approximate cost of moving to the new home and making any needed improvements These three costs add up to a total of... $50K! So... you could spend $100K to improve your $450K home to make it worth $500K... and "lose" $50K. Or... you could sell your $450K home, buy a $500K home, have $50K of transactional costs and thus still "lose" $50K. As such, even if the improvement cost of your home exceeds the increase in your home value after the improvement... it still might make sense to make that improvement rather than selling your home and buying a new ones. Receive Updates by Email Recent Articles: There Are Plenty Of Types Of Houses That Exist That Just Are Not Available To Purchase Home Sales By Price Range In The City Of Harrisonburg Are You Compromising On Aspects Of Your Next Home That You Can Or Cannot Change Later? How Much Slower Are The Winter Months In Our Local Housing Market? Rockingham County and New Home Sales Drive Surge in Area Housing Market Find The Balance Between Optimistic And Realistic Home Pricing Room Size Is Difficult To Understand Solely From Real Estate Photos How Much Would You Value Not Having To Prepare Your Home For Showings? One Out Of Four Homes Is Taking Longer Than A Month To Sell Consider The Cost Of Your Planned Renovations When Planning Your Offer
Have any questions? Contact Scott Rogers at 540-578-0102 or scott@funkhousergroup.com
Based on information from the Harrisonburg-Rockingham Association of REALTORS® or its MLS, for the period Jan 1, 2000 through Nov 21, 2024 (unless otherwise noted).
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