With the real estate market currently being more friendly to home buyers than to sellers, many owners are thinking about altering or adding on to their existing properties rather than trying to sell and move to a different home.
However, says Rob Allan, owners of the RealNet franchise in Randburg, this is really not an easy choice, and home owners should weigh up the answers to the following seven questions before making a final decision to stay put or relocate:
- Is a move the only option? It could be that you have a problem that only a move will fix – like horrible neighbours, the need to live within a certain school catchment area, or the fact that you can’t afford your current home and need to downscale … And in such cases the best course of action is to appoint a reputable and experienced agent, set a market-related asking price and sell as soon as possible”.
- Do you really love your existing home? If you have a strong emotional connection to your home and the area or community you live in, a renovation or addition is probably your best choice. At the very least”, says Allan, “you should consult a good residential architect to see what options there are for upgrading or extending and avoiding a move”.
- Do you need more space or more rooms? Many home owners base their decision to sell on the need for an additional room or two. But it is possible that by just altering the interior layout of your home, you can make more efficient use of the existing space and create that extra bedroom or TV room or home office that you need. “Once again you will need to consult an architect, but if you can reconfigure your floorplan, it will usually be much less disruptive and less expensive to go ahead with the alteration rather than move”.
- Would you be over-capitalising? There is a risk that by making a major addition or alteration to your existing home you would be “over-improving” in relation to the rest of the homes in your area.
“If you live in an area of smaller homes favoured by first-time buyers, for example, an expensive renovation or upgrade does not make sense, because it is very unlikely that you will ever be able to sell your home at a high enough price to recoup the cost of your improvements. This is especially true in the current phase of the market, when home values are only rising very slowly,” notes Allan
- How long will it take to earn back the transaction costs if you move? The bond registration costs, transfer duty and legal fees you will incur if you decide to buy a new home and move can add up to a hefty sum.
“Consequently, you need to be sure you will live there long enough for the value of the property to rise sufficiently to cover these costs. This time period will vary depending on the price of the property and the performance of the market overall, but is usually between five and seven years – meaning that if you sell again before that, you could end up losing money by moving.”
- “Can you stick to a budget? Budgeting accurately is essential if you do decide to renovate – but to ensure that you don’t overspend, you need to know exactly what work needs to be done and what it will cost – and that you can resist the temptation to change your mind or the specifications as the project proceeds”, says Allan.
“Otherwise you might as well put your budget towards the purchase of a bigger home.”
- Can you stand the process? In the excitement of planning their home improvements, many owners overlook the fact that it is probably going to be a messy, noisy, inconvenient business that will take much longer than they anticipated and really test their patience and good humour. If you don’t feel that you can live with that, you will probably be better off moving to a new home.