Paul and Barb Buckley debated the same question faced by scores of homeowners. Their family was growing. Should they buy a new home to relieve the cramped quarters of their residence? Or would it make more sense to remodel, adding new rooms and extra square feet? The Buckleys chose the second option.
This spring, construction workers will add a family room, two bedrooms and two bathrooms to their house in Chicago’s Gladstone Park neighborhood. In all, the remodeling project will add 750 square feet to their home. Enough, the Buckleys hope, to provide room for all three of their young children.
The decision wasn’t an easy one. But the Buckleys didn’t want to leave a neighborhood in which they felt so comfortable.
“We like the proximity to downtown,” says Paul Buckley. “We live in the city but it feels like the suburbs. The neighbors are nice. Would we be able to find neighbors as considerate and helpful as ours if we moved? That’s the question we asked ourselves.”
Deciding whether to buy a new home or remodel an existing one is never easy. Like the Buckleys, many homeowners decide to stick with a neighborhood they love. But others choose to buy a new or existing house to gain that bigger kitchen, extra bathroom or fourth bedroom.
Who’s right? It all depends on the situation. There are several factors homeowners should consider when debating whether it’s time to move or expand.
Do you have the smallest Queen Anne on the nicest block in town? How about the biggest and most expensive Cape Cod in your aging subdivision?
The answer to these questions might be the most important factor to consider when debating the remodeling/buying question.
Real estate agents will tell you that it’s never a good idea to have the biggest and most expensive house on a block or in a subdivision. Why? The smaller, less expensive properties surrounding you will only drag down the eventual selling price of your residence, no matter how much money you’ve put into it over the years.
But if you own the smallest house on one of the nicest blocks in town, it makes good sense to renovate rather than move. You might not be able to afford a larger house in your same neighborhood. And the investment to remodel will almost certainly pay off when you do decide to sell. Buyers are always attracted to the quiet, nicely landscaped streets common to good neighborhoods.
“If you’re in a subdivision with homes all ranging in price between $200,000 and $225,000, and you add a $40,000 bedroom, you might be making your home the most expensive in the area,” notes Marco Amidei, a broker associate with Re/Max Suburban in Libertyville. “If a remodeling project would put you at the top end, you should buy a new house. I’m a big believer in buying a new house rather than in taking on an expensive remodeling project.”
There are intangibles, too. What if you simply love your neighborhood? The schools are great, the parks are nearby and the neighbors are friendly? In this case, homeowners might be happier remodeling cramped houses than they would be in moving to a new neighborhood that they might not enjoy.
“You love the neighborhood and hate the house. That’s one reason to remodel,” says Pat Simpson, the host of two home-renovation shows on cable television’s Home & Garden Television network. “Other times, you love the land and hate the house. In both cases, it makes sense to remodel.”
Many homeowners live for years in one house. As their family grows, they need more space. It’s time, they think, to buy a new house. But when they start looking, they realize that the prices of homes in their community or neighborhood have skyrocketed since they first bought their residence.
The shock of escalating prices may transform even the largest of remodeling projects into a cost-saving measure.
“You walk into a real estate office, and they start running down the prices of homes for sale in the neighborhood. Then you realize how expensive things have gotten,” says Gene Hamilton, who, with his wife, Katie, is the author of “Home Improvement for Dummies” and a regular contributor to Your Place. “All of a sudden, that $150,000 to $200,000 addition doesn’t seem as outrageous.”
Because fewer people than ever stay in one residence for their entire lives, homeowners must also consider the economic benefits of remodeling projects. Some add value to a home when it comes time to sell. Others don’t.
Tom Finney, director of technical services for Bound Brook, N.J.-based home inspection giant HouseMaster, recommends that owners concentrate on bathrooms and kitchens when they’re remodeling.
“Before doing any remodeling, you have to know how much you can expect to get out of it when it’s time to sell,” Finney says. “If you spend this much, how much will you recoup when you sell? You have to know the averages before you remodel.”
A minor kitchen renovation, including new floors, cabinets and countertops, can cost anywhere from $8,000 to $10,000, Finney says. But owners can expect to recover a whopping 95 percent of that when they sell.
Spending from $10,000 to $13,000 on a new bathroom also makes sense, Finney says. When they sell, homeowners can expect to recover about 90 percent of their costs.
Thinking about finishing that old cement basement? Expect to recover just 50 percent of your costs, Finney says. And stay away from adding pools or hot tubs. These rarely pay off, he says.
Before choosing to remodel, owners should also consider the amount of time they plan to live in a house, says Toni Sherman, a broker associate with Coldwell Banker Residential Brokerage’s Glen Ellyn office.
“If you’re only going to be living there a couple of years, you’ll never recoup your investment,” she says. “You won’t see it in your selling price or in the amount of time you spend enjoying the remodeling project.”
Buying and remodeling both come with their own set of headaches. Which set is worse? That depends on your personality. Homeowners, though, should consider the travails common to both options. It may be that you’re able to handle the delays and noise that come with gutting your kitchen. But the frustration of losing a dream home to a lower bid may drive you nuts.
“Each option has its own frustrations,” says Barbara Buchholz, a frequent contributor to Your Place and co-author of “Successful Homebuilding and Remodeling: Real-Life Advice for Getting the House You Want Without the Roof (or Sky) Falling In.”
“Moving is a pain in the neck,” she says. “You have to get all the boxes. You have to do all that packing and unpacking. And remodeling can be expensive. It can take longer than expected. Any house you remodel, you never know what you’re going to find.”
Each option also comes with hidden costs. Buying a new house means a long list of closing costs, including everything from a title search to attorney’s fees. There’s also the new furniture that inevitably comes with buying a house. And many homes don’t come with refrigerators, washing machines or other appliances. This all adds up.
The hidden costs of remodeling can be even bigger. Say you tear up the kitchen floor only to discover rotting beams underneath? Or you punch out a wall only to discover that your entire electrical system needs reworking?
These can mean big bucks.
“When remodeling, you have to assume the worse and then be pleasantly surprised if you’re wrong,” says Katie Hamilton. “Go in expecting the project to take six months, at least, and to cost more than you expect. Expect it to change the way you’re going to live for six months. That way, it won’t be a great surprise when obstacles come up. Beautiful houses don’t happen overnight. It’s serious stuff.”
Kathleen Parrott, an associate professor and housing specialist at Virginia Tech University, has some advice for anyone thinking of a major remodeling project: “Take your family to a nice dinner. Make sure everyone feels good about each other. Remember this time when the remodeling is going on and tensions are running high. You have to remember that you do actually like these people.”