When homeowners find their current residence no longer meets their needs, the first thought is generally to sell the home and purchase a new one. Perhaps the property is too small for a growing family, there is no office space for a professional transitioning to a work from home position, the outdoor areas are uninspiring, or a cooking enthusiast dreams of a gourmet kitchen.
Of course there is often another option: renovating the existing home to add the desired space or features.
When does it make sense to renovate and when does it make sense to move on to a new home? There are many factors that go into this decision, but here are a few for your clients to consider:
In favor of renovating:
- Limited Inventory
In many parts of the country there are not enough homes available for sale to meet the demand of consumers interested in purchasing real estate. It can be tough to find a new property that will fit what a specific buyer is looking for, and should they find it they will likely encounter stiff competition from fellow house hunters. It is not uncommon in a strong sellers’ market for new listings to receive multiples offers within days, for the winning offer to come in over asking price, and at times even over the appraised value.
- Cost of Moving
When shopping for a new home most people take into consideration the increased monthly mortgage payment associated with buying a more expensive property, but are sometimes taken aback by the additional costs they are confronted with. Just the physical move can cost several thousand dollars depending on how much the homeowners take on themselves. Then there are deposits for all utility accounts, and the cost of those sometimes unexpected items that must be purchased for the new home, such as blinds for all the windows or new appliances.
- Time Involved
While anyone who has undertaken a home renovation will attest to the fact that it does take time, it’s likely to be considerably less than the time required to move to a new home. A move involves finding a property to purchase, readying the current home for sale, navigating the sales process for both properties (involving contract negotiations, appraisals, inspections, closing, etc.), and packing up all belongings and moving them to the new home. Finally there is the task of updating all family, friends, businesses, and organizations with new address information.
Of course renovating isn’t for everyone, and every scenario.
In favor of moving:
- Outpricing the Neighborhood
A home that is considerably nicer than the homes surrounding it is unlikely to command top dollar when it comes time to sell. If that addition with extra bedrooms and full scale kitchen renovation will cause a home to no longer be in line with its neighbors it may make more sense to sell and purchase a property in a more upscale part of town.
- Location Wish List
If the location of the current property isn’t ideal, that’s something that likely can’t be changed through renovating. If the homeowners are hoping for a larger lot, a water or city view, a shorter commute, or a different school district a move may be in order.
If after weighing the pros and cons, and evaluating the specifics of their scenario your clients decide to explore a home renovation, it’s time to talk financing. Thanks to renovation mortgage programs such as the HomeStyle® Renovation loan from Fannie Mae home upgrades can be financed when remodeling.
The HomeStyle® Renovation mortgage can be used by existing homeowners to refinance and cover the cost of paying off the current mortgage as well as for the repairs or updates. Learn more at https://www.afrwholesale.com/resources/program-fact-sheets/
Photography by [thodonal88] © shutterstock.com
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