A common question we get from homeowners who are outgrowing their current home is, “Does it make more sense to renovate/expand or buy a larger home”? Over the last 20+ years, we’ve had the opportunity to help hundreds of clients navigate this question, not to mention having navigated this question personally. Each homeowner’s circumstances are unique and there are pros and cons to each option. Here are some high level points if you’re considering renovating/expanding vs buying a new home. Of course, if you’re considering a major renovation or move, please reach out. We can help you frame your analysis and make an informed decision for you and your family.
If I go there will be trouble…
The main reason to move, of course, is that you would be getting a bigger, nicer house. On the other hand, the main reason to stay where you are and expand is that you already know the home and neighborhood, have friends in the community and love where you are. You can sometimes solve a problem with a reasonably priced renovation. This option might be more affordable than moving and buying a new home.
If I stay there will be double…
However, there are some major drawbacks to renovating that are easily overlooked. First, additions to older homes have a way of becoming more expensive than originally budgeted which we affectionately refer to as “cost creep.” Builders don't always know what they are going to find until they open up the walls, dig foundations, etc. Second, homes are generally built with a consistent aesthetic, and the design/flow of the home makes sense given its scale. Additions, particularly big ones, can compromise the home's flow and congruency, and can sometimes create awkward spaces, dark rooms or partially blocked views. Third, sometimes an owner's taste-specific customizations make the home less desirable for future buyers. Finally, there are cost/inconveniences to living through a renovation or moving out temporarily.
So come on and let me know…
One prudent thing to do if you’re considering a major renovation or expansion is to determine if the increased value of the home will be more or less than the “all-in” cost of the renovation. The truth is that in the majority of cases, the renovation costs exceed the increased value to the home. The NAR puts out a cost/value report every year that shows that an owner gets between 60% to 90% of every dollar put into a renovation.
In other words, not a good investment.
Of course, this is a purely financial model and does not factor in the value of your personal enjoyment/utility of the renovations. If your plan is to live in the home for many years, however, then taking a loss on the investment doesn’t matter as much. However, if you think there is a reasonable chance you'll move in 3-5 years, then the return on investment might not make as much sense.
Either way, we strongly recommend that you speak with us before pulling the trigger so that we can give you our thoughts on the economic impact of your proposed project. That way you can make an informed decision to determine whether you should stay or go.
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A common question we get from homeowners who are outgrowing their current home is, “Does it make more sense to renovate/expand or buy a larger home”?
Wydler Brothers have been selling residential real estate for over 20 years in the DC metro area. Along the way, they’ve achieved numerous awards and recognitions, including being recognized as “The Most Innovative Real Estate Agent in America” (Inman, 2014), written several articles for The Washington Post, authored a book, “Inside the Sell”, co-founded a real estate tech company which sold to Move, Inc. in 2013, and built Wydler Brothers into a highly respected boutique brokerage with 70 agents and employees which they sold to Compass in 2019. Currently, Wydler Brothers is among the top 3 teams in the DMV and was the #1 Compass Team in 2022.