Remodel or relocate?

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At the Novi Home Show last weekend, more than one hundred home improvement experts were on hand to counsel with homeowners and complete almost any project you may be considering such as replacement windows, kitchen and bath remodels, basement finishing, home theaters, and fitness rooms.

According to their website, the Home Show organizers expected between 5,000-20,000 attendees. What draws people to the Home Show? Since the cost of home improvements are costly, many homeowners appreciate the opportunity to research their options, familiarize themselves with pricing, and meet several local companies in a short period of time. At this show, there were 19 companies that could remodel your outdated kitchen, 20 who could upgrade a master bathroom, and 7 who could update bedroom flooring. By walking the distance of a short city block at Suburban Showplace, you could educate yourself pretty quickly.

When I was at the show, I saw homeowners weighing their options very carefully and rightly so. According to the 2019 Cost vs Value report, the cost of a mid-range kitchen remodel is $66,196 and the value is estimated at $41,133 which is a 62.1% return on investment. As you can see, a homeowner will lose money on this upgrade if she immediately sells the house because another homebuyer most likely will not appreciate the full value of the colors, selections and customizations. It reminds me of a new car that loses a good chunk of value the minute it drives off the dealer’s lot.

With this financial reality in mind, how do you know if a renovation is worth doing? Ask yourself:

1. How long can you see yourself living in the house?

2. Where is your house priced in relation to other houses in your neighborhood? Would your remodeling project be consistent or overkill?

3. Does it financially make sense to remodel?

One way to quantify the cost of the remodel is to take the price, divide it by the number of years you will likely enjoy the upgrade and determine the monthly payment. Then, utilizing a mortgage calculator, reverse engineer how much extra house you could afford if you applied that money towards another, more expensive house that contained the upgrades you desire.

Current interest rates are 4.06% for a 30-year fixed mortgage so it is worth calculating how much your dream home would cost versus undergoing a costly home renovation project.

Remember, there are transactional costs to moving, so rely on the advice of a real estate professional who can provide your current home’s market value and a net sheet detailing all expenses related to selling. Rely on your favorite lender for a Good Faith Estimate so you understand mortgage-related costs. By following these steps, you can find out if remodeling or relocation is the right move for you. 

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Tracy Wick, MUP, SRES is a Novi-based Michigan Seniors Real Estate Specialist with over 25 years of experience as a real estate consultant and client advocate. Are you decluttering your home to prepare it for the market? Tracy can help guide you through the selling process and assist you in your new home search ensuring that this important transition is the right one for you. Find more articles on buying, selling, elder transition and estate settlement at TracyWick. com or contact her directly at 248-912-7407 or twick@kw.com
 

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