Move or Remodel: How to Get the Home of Your Dreams
Whether to move or remodel is a question of cost and convenience. If you and your family have outgrown or tired of your current home, you’re probably ready either to sell your home and trade up or to jump into a major home remodeling project. But the question is which option makes the most financial sense for you – moving or remodeling?

Calculate the costs of moving
The chief advantage of moving is that you’ll be able to see your fully finished new home, rather than only drawings, before you make a commitment. Yet moving can be disruptive and it’s not without a myriad of costs.

In addition to the purchase price of your new home, transaction costs involved with moving could include real estate agent commissions, mortgage origination fees and home inspections. In addition, your monthly mortgage payments, homeowner’s insurance and property taxes could be more expensive after you move.

If you sell your current home first, you may also need to obtain temporary housing until you’ve purchased your new home. Depending on where you live and how long before you can move into your new home, temporary housing could get expensive. Or, if you buy your new home first, you may have to make two mortgage payments each month until your current home is sold. You might also need to hire contractors to make necessary repairs to ready your current home for sale or your new home for occupancy.

Other costs include hiring a moving company or renting a moving van, and making deposits to set up new accounts with local utility companies.

Consider inconvenience of remodeling
The chief advantage of remodeling, on the other hand, is the opportunity to design your own home and choose the features and amenities you want as your home is being transformed. Yet remodeling can be costly and disruptive in its own way.

In addition to the costs of the remodeling project and the potential cost overruns, you’ll also need to pay for architect or design services, building permits, and new fixtures, appliances or furnishings for your remodeled home. You may also be facing a second home loan payment each month and potentially higher property taxes.

If you move out of your home during construction, you may need to pay for temporary housing. Or, if you decide to remain at home, you’ll probably incur some additional living expenses such as takeout meals or professional cleaning services.

Personal preferences are important too
Whether to move or remodel depends not only on the costs, but also on how much inconvenience you’re willing to tolerate and how you feel about the two options.

If you’re enthusiastic about finding, buying and moving into a new home, moving may be the right choice for you. But if you’re emotionally attached to your home, you may prefer to remain in place and remodel. Either way, you’ll be that much closer to the home of your dreams.

Move vs. Renovate: A Tale of Two Couples
Why one decided to move and the other decided to renovate. If you’re growing out of your home, you may be debating whether to start house hunting or start adding on. To help you make the right decision for you, here’s a look at two newlywed couples and how they decided whether to move or to renovate.

Allison and Mike loved their 1940s-era home near downtown Charlotte, N.C., but at 980 square feet it was barely big enough for the two of them, let alone their 75-pound greyhound, Jack, and a cat named Azriel.

Similarly, Bridget and Kenny loved their 1950s home in south Charlotte. The size wasn’t bad, at 1,357 square feet. But a second bathroom would be nice, they thought. So would a place to keep their 70-pound dog – someplace other than a kennel in the eat-in kitchen.

Both couples started seriously debating their housing future in the summer and fall of 2006. One decided to renovate, while the other decided to move.

Allison and Bridget work together at LendingTree, the parent company of RealEstate.com.

The Renovators
Allison and Mike always knew they’d renovate their little home someday. The neighborhood was exactly what they wanted, with the charm of older homes and tree lined streets. “We love our neighborhood. We can walk to shops and restaurants, we’re close to downtown Charlotte and having sidewalks on each street is perfect for walking our dog or going for a run.”

Mike and Allison briefly considered moving vs. renovating. They wanted to make sure they entertained every idea but research indicated they could probably renovate for a lower cost per square foot than buying a home in a similar neighborhood close to town, she said. Since they loved their neighborhood so much and the thought of finding a new, equally appealing neighborhood seemed unattractive, they moved forward with their renovation research.

The next step was figuring out how to expand their two-bedroom, one-bath home into something more livable and practical. A lot of other homeowners in the neighborhood were doing the same thing, so they jotted down the names of architects and builders doing projects similar to the one they envisioned.

The couple ended up interviewing and hiring an architect who they really connected with. “We sort of gave her our lifestyle rather than telling her, ‘We want four bedrooms and a lot of square footage,” Allison said.

The result: Plans for a nearly 2,800 square-foot home remodel with four bedrooms and 2-1/2 baths in a story and a half, with period touches like hardwood floors and arched doorways as well a comfortable den area connected to a much larger kitchen.

The next step is to get bids from contractors. The Renovators have their fingers crossed.

The Movers
Bridget and Kenny thought from the start that moving made more sense than renovating.

“That’s before we started looking at prices,” Bridget said. But she never could envision a renovation that would deliver the larger master bedroom, second bathroom and den they wanted. The idea of gutting the house wasn’t appealing, either.

So they continued house shopping and ended up finding a house they loved. Because they were initially planning to live on one income and save the other, the price “blew our budget,” Bridget said. But the couple could imagine living in the home forever. It was built in 1963 and needs some updates, but the five-bedroom, three-bath home is in a good school attendance zone and near close friends and family.

If a renovation had looked like it would be “a quick and easy job,” they might have considered it more seriously, she said. And “if we hadn’t found a house we really loved,” renovation might have been more attractive as well, she said.

But she says she and her husband were happy with their choice and are excited about moving in to their new home in a few weeks.

Two couples, two decisions, with the best of times surely yet to come.

Home Renovations That Pay
So you've decided to brave the dust and dirt and inconvenience — not to mention the expense — of a renovation project. If it’s because you’ve always wanted a basement family room or extra bath and it will enhance your quality of life, go right ahead. But if you are planning to sell soon and think the renovation will increase the resale value of your home, hold on.

Studies suggest that most renovation projects do in fact increase the price of the home at resale. However, the increase is typically less than the cost of the project.

According to Hanley-Wood LLC’s 2004 Cost vs. Value Report, homeowners recouped:

• 85 percent of the cost of an upscale bathroom addition when they sold their homes, and 90 percent of a more modest one.

• 80 percent of the cost of an upscale kitchen renovation, and almost 79 percent of a more modest one.

• 76 percent of the cost of a basement remodel (including large entertainment area, full bath and one additional bedroom-sized room).

• About 77 percent of an upscale master bedroom suite, and 80 of a more modest one

• 86 percent of a deck addition.

This report contradicts the common wisdom that kitchen and bathroom renovations pay for themselves, while basement renovations don’t. It also suggests that you should renovate primarily for your own enjoyment and accept that your project will pay for itself only partially when you sell.

One thing the report doesn’t take into account is how renovations affect the marketability of your home. Real estate agents say that a gleaming kitchen with state-of-the-art appliances, cork or hardwood flooring, stone countertop and lots of cupboard space can sell a house the instant a prospective buyer sees it. Conversely, a cramped, ill-lit kitchen with outdated linoleum and harvest gold appliances might actually scare buyers away. It screams money pit.

Bathrooms are another big draw. Both quantity and quality count. A house with two or three baths with quality fixtures and finishes will sell much faster than the same house with one bathroom with moldy grouting and ancient fixtures.

If you can’t afford to renovate, update and refresh key rooms instead. Replacing an old countertop, repainting cupboards and walls and installing new door pulls and lighting can make a big improvement in your kitchen for a very modest price. Similar touches increase the appeal of older bathrooms, too.

Fresh paint throughout your home is another low-cost, high-return project — it makes everything look cleaner and brighter, and buyers love a house they won’t have to redecorate immediately.