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How to Decide Whether to Remodel or Buy Another House

by Shannon Moudry
  • Overview

    Most homeowners sooner or later will have to decide whether they want to remodel the house they are living in or buy another house. This decision can often leave homeowners a bit overwhelmed. However, with the right information, they can come to a reliable conclusion.
 
  • Step 1

    Take some time and think about the reason behind the change you would like to make. According to frontdoor.com, it is very important to do this before you take any sort of action.
  • Step 2

    Make a list of all the things that you would like to change or repair. Get an estimate from two or three general contractors for the total cost of repairs.
  • Step 3

    Have a real estate agent give you an estimate of what your house is worth before any changes. Tell the agent about the changes you would like to make, and ask him for an after-repair value as well as comparable houses in the area that have sold in the last three to six months.
  • Step 4

    Ask the real estate agent for an estimate of the costs involved in selling and buying a home, such as the agent's fees, closing costs, inspections, appraisals and any other additional fees. Calculate the total cost of selling your home and buying a new one--and don't forget to include moving expenses.
  • Step 5

    Use the information that you have gathered to compare the total cost of remodeling your current home to the total costs involved in buying another home, and make the best logical choice for your situation.
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  • Paper Pen
  • Paper
  • Pen
  • Some reasons you may be looking for a change might include a desire for a larger home, wanting a different layout or the fact that the house simply needs upgrading. Use the estimated after-repair value of your home to determine what percentage of the dollar amount spent on remodeling will be recouped as equity. Use this information to determine if the remodel is worth the investment. Use the information from the comparable homes that have sold in your area to determine an average price of home sales that are comparable to your home, before any renovations. Use this information to determine whether selling your home will yield enough profit to cover all the costs associated with selling it and buying another home. You should also consider the amount of time that it will take to remodel your home and where you will stay during the process, along with lodging and meal costs.
  • Some reasons you may be looking for a change might include a desire for a larger home, wanting a different layout or the fact that the house simply needs upgrading.
  • Use the estimated after-repair value of your home to determine what percentage of the dollar amount spent on remodeling will be recouped as equity. Use this information to determine if the remodel is worth the investment.
  • Use the information from the comparable homes that have sold in your area to determine an average price of home sales that are comparable to your home, before any renovations. Use this information to determine whether selling your home will yield enough profit to cover all the costs associated with selling it and buying another home.
  • You should also consider the amount of time that it will take to remodel your home and where you will stay during the process, along with lodging and meal costs.

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