Its not an easy decision to decide whether you should sell your home or renovate. Your existing home may need to be updated, or you may have outgrown it as your family has expanded. Your decision may even be financially based or location driven. Whatever choice you make, it needs to one that suits your budget and your future needs.
Assessing Your Existing Home
To make the right decision about selling your home or renovating, you firstly need to access your existing property. You can do this by walking around your home and writing down what needs to be repaired, removed or added to make your home ideal.
You also need to be aware that if you renovate more than 50 percent of your home, then you are required by law to bring it up to current building legislation. So, this may add a sizeable cost to your renovation project if you own an older home, as you may have to rewire and plumb the property, and meet current energy ratings.
Once you have decided what needs to be renovated in your existing home to suit your needs, then research costs to carry out the work. Estimate what you can do yourself, and what materials you will need. For those jobs you cannot do yourself, then contact the relevant tradesmen. Ask them to give you a quote. This plan of attack will give you an excellent idea of associated costs and also a timeframe for completion.
Its also a good idea to have a chat to the council about any application fees, and what work you will need permission for before you start any work. This process will enable you to estimate all of your costs.
Its also a good idea to work out if you can live in the home during renovations or not. Major work will cause disruption to your daily schedule, especially when tradesmen need to turn off your service so they can carry out work safely. If you cannot live in your home during the renovation, you will need to find temporary accommodation, so you will need to factor this price into your costs.
The Cost of Buying Another Home
Older homes sometimes need a larger cash injection to achieve desired results. So, when compared to todays new home building methods, which are extremely cost-effective, renovating can be an expensive option. For example, some old and dated weatherboard homes, which have no historical significance, can easily cost between $300,000 and $400,000 to renovate due to them needing to be fully rewired, plumbed and termite proofed. Depending on where the home is situated, these costs may far outweigh any capital gain.
Other options are to sell your existing property and to buy a relatively new, but established home, or to build a new home in a different area. But, if you elect to sell-up, then you need to weigh-up your costs. For example, a home situated in New South Wales that sells for $600,000 will attract a $22,490.00 stamp duty. You will also need a 20 percent deposit and extra funds to cover legal fees and bank charges. The cost to hire a real estate agent to sell your existing property will also incur a fee of 2 percent or more of the selling price, plus any advertising fees.
Even with these added costs, sometimes it is far cheaper to buy a new home, rather than renovate. But, not all renovation decisions are just financially based. Homes that have been lived in by generations, and handed down from a parent to a child, can have far more significance than a monetary value.
The Cost of an Emotional Connection
Homes that have been in the family for generations and have seen children born, and grow in them are far more valuable than money. So you need to ask yourself how much is your home worth emotionally before you make a choice. If you have a family, then you also need to consider how moving to another location will affect your children.
Written by eChoice
Since 1998, eChoice has helped more than 50,000 Australians secure a home loan through its network of over 25 lenders and hundreds of loans. Best of all our service is cost and obligation free!