Question: Should you Relocate or Remodel?

Owning your own home has long been a tenant of the great American dream, with more than two thirds of Americans living in houses they call home.

However, families evolve over time, and the charming smaller home that your found to be ‘just right’ when you got married may not be the right one for a growing family.  A small home can quickly become too small with too many toys, tools and tricycles and people stumbling over one another in the course of everyday life.  When this happens, the age old question comes to light – should you remodel or relocate?

Historical Home Sales

In the past, when the real estate market was hot, most home owners could depend on a fast sale of their home, so that they could quickly move on to finding the home that fit their needs.  However, recent years have been a roller coaster ride when it comes to home sales.  Overall, many homes have decreased in value and sellers cannot always get the price they need in order to afford a new home. This means the decision to sell your current home and ‘trade up’ is not as cut and dried as it once was!

According to BuildFax, a national research company that analyzes real estate construction trends, the rate of remodeling is at its highest since 2004, providing a ‘bright spot’ in a challenging economy. Here are a few questions to answer to help when making the decision to remodel or relocate.


While moving can be exciting, selling and purchasing a new home is not for the faint of heart!  One of the first things to consider when looking at the concept of relocating, is school districts.  Have your children already begun school?  Does this mean you need to only look for homes in that school district?

The next thing to look at is the financial consequences. There are numerous tax laws that affect the calculation of taxes upon the sale of one’s home and the repurchase of its replacement. A married couple can exclude up to $500,000 in gain from the sale of the initial house if they meet certain conditions. And tax credits may be available, depending on when you buy property. Definitely seek professional advice to understand the tax implications of selling your home and buying a new one.

Disadvantages of Relocating

There can be many hidden costs when dealing with real estate.  Selling a home and buying another usually involves the payment of agent commissions – one on the sale, and one on the purchase. These fees, which usually total 6%, reduce the profit and increase the cash necessary to complete the transaction. In addition, there are appraisal expenses, title search fees, title insurance, and legal fees.

And, of course, the logistics of is all.  Let’s face it, moving is a pain, if for no other reason than that you have to deal with years and years of accumulated “stuff.” The greater number of people in the family, the more belongings – needed and unneeded – there are to sort through. Admit it or not, we all have a little pack rat in us, so having to organize, box, and move our possessions is time-consuming, expensive, and possibly hazardous to the items being moved. You just need to buckle up and consider it a means to an end.


Ok, now that we have looked at the concepts to be considered when looking at relocating, what questions should you ask when considering remodeling?   The first question to ask is, how much land do I have and based on the current zoning, now large of an addition can you do without applying for a variance?

The second question to ask is what is the value of most of the homes in the neighborhood?  Once the addition is put on what will be the value of your home and can you sell it for that price in the future?  The one thing you want to ensure is that you are NOT over capitalizing you home by putting in too much money that you can never recoup.

If the financial numbers work, there are many other concepts to consider in the ‘pro’ column.  Staying put means a more stable decision for your family.  You don’t have to make new friends, shop in new places, or trip across new problems like finding out there is an oil tank under the new property!

The second concept to consider as a positive for remodeling is that you can completely customize your new living space.  While a new home might be new, it won’t have exactly what you want in terms of size of closets, flooring options or kitchen gadgetry.   A remodel means you can choose exactly what you want (of course, you have to keep your budget in mind!)

Disadvantages of Remodeling

Remodeling can be difficult to finance. Remodeling projects are typically paid for through a homeowner’s loan from a commercial bank, which approves a second mortgage on the property. These generally require a higher credit rating from borrowers and carry a higher interest rate and shorter payoff terms. Other forms of financing include family loans, extended payment terms from a contractor, or even vendor loans for appliances and equipment. Approvals depend on several factors: the equity in the home before the project, the cost of the remodel, and the expected market value once completed.

There can be a lot of hassles when you live in the home while it is being remodeled.   Granted, there are good contractors who will minimize the sting, but there are few things as irritating as awakening daily to the high-pitched whine of an electric saw, the stomping of strangers all over your home before your morning coffee, and regular meetings where you hear “looks like this will cost a bit more”.

Final Decision

It is easy to tell when you need more room.  The real trick is in looking at all the angles to figure out how best to achieve your dream home.  The best thing to do is sit down with your family and do a  pro and con list for each option.  If should immediately become apparent which option you should take!

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