Monthly Archives: March 2015

Pros & Cons: Renovating vs Buying a New Home

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Pros & Cons: Renovating vs Buying a New Home

Is it better to renovate a home or buy a new one?

March 18, 2015

Guest Post by Andrea Davis

After living in your home for a long time, you might decide it’s time to make a move. But if you don’t exactly have the budget for a new home, it might serve you better to remodel your existing home. How do you determine which is the better decision? Here are some considerations to help you make the big choice.

Questions to Ask Yourself

  • Is staying in your location really important? If you like the neighborhood you’re living in, you have the choice to renovate your home or buy a home in the same neighborhood.
  • Do you have the budget? In locations with affordable homes, you might lean towards buying new. In cities with expensive homes, it might be cheaper to renovate.
  • Can you renovate your home without changing the floor plan? It costs less to renovate your home — almost 50 percent less — when you don’t change the structural elements.
  • Will renovations increase your home’s value? Some remodels and changes increase a home’s value, while others are just money down the drain depending on your local market. You should always consult with a remodeling expert before you embark on big projects to see if they’ll add value.
  • What’s your long-term plan for the home? You shouldn’t make renovations to a home if you don’t have a long-term goal for it. For example, if you live in a two-bedroom house and plan to have a lot of kids, you’ll likely need to move sooner than later. Sometimes it’s just easier to move into a new home.
  • How does moving affect property taxes? Property taxes vary by county, and moving into a new home might mean an increase. Check with a real estate agent and the city itself before to make sure you wouldn’t be paying more taxes as a result of moving.
  • How is your mortgage affected by a move? Buying a new home could mean a lower mortgage, depending on market conditions. You could also end up with the same mortgage — you’ll need to see what real estate pros say and what your best deal could be.

Weighing the Pros and Cons

Once you’ve answered some of these questions, you might be leaning more towards one decision than the other. If you need more information on renovation versus buying a new home, here are some of the pros and cons of both decisions.

Relocating

Selling your old place before searching for a new place can be a long, extensive process with an exciting result. And it can be both stressful and arduous if you don’t approach it correctly. Here are some of the advantages and disadvantages to weigh in the process:

Advantages

  1. New beginnings: You get to start over in a new place — whether it’s down the street or in a new neighborhood, city or state — beginning again with your family and belongings. You get to meet new people, decorate your new home and settle into a new landscape.
  2. Financing options: Once you’ve bought a house the first time, it’s easier the second or third time around to go through the paperwork and purchase process. Your agent will help with title, insurance, taxes and finding a quality lender to help you buy the house.
  3. Income taxes: Depending on your state laws, selling your old home could land you extra money in your pocket without added taxes because of the capital gains exemption (which is up to $250,000 and $500,000 for married taxpayers). There also are eco-related tax credits available if your new home qualifies. You should check with your real estate agent and tax filer.
  4. High costs: Selling a home involves paying your real estate agent and other fees throughout the process. It’s long, complicated and expensive, and you have to be willing to go through it to acquire your new place.
  5. Moving: Moving can be a problematic process because you always find stuff in your old place that you never used. That leads to sorting, throwing away and trying to pack everything within a short timeframe. It’s added stress that can be overwhelming at times.

Disadvantages

  1. High costs: Selling a home involves paying your real estate agent and other fees throughout the process. It’s long, complicated and expensive, and you have to be willing to go through it to acquire your new place.
  2. Moving: Moving can be a problematic process because you always find stuff in your old place that you never used. That leads to sorting, throwing away and trying to pack everything within a short timeframe. It’s added stress that can be overwhelming at times.

Remodeling

While your current home may seem drab at times, remodeling the space allows you create new spaces, update its function to meet your needs and create an ideal home, depending on your budget. However, it comes with a lot of disadvantages that may or may not be worth the investment.

Advantages

  1. Costs less: The cost to remodel your home is less than buying a new home because it’s on a room-by-room basis. You don’t have to remodel everything in your home, which means your budget can flow with what you need to do. Moreover, there are ways to save money on your renovations so that you get a great end product without spending a fortune.
  2. Personal touch: Renovating allows you to change your existing home to meet your personal expectations and desires, as compared to buying a new home that may have a few features you want but not at all. Why spend hundreds of thousands on a new house and update it when you can keep your old home and update it a little at a time?

Disadvantages

  1. Not for major overhauls: If your home needs a complete do-over, then a remodel isn’t for you. It’s not worth the investment to spend thousands of dollars to change every single room in your home when you could buy a new house with all of the updates. It’s better to renovate a few rooms in your house rather than all of them. It’s also not worth it to remodel your house if you’re trying to downsize.
  2. Financing issues: Remodeling requires a homeowner loan, family loan, payments to contractor or vendor loans. You must have home equity, so if you haven’t lived in your home for a long time, it could be hard to get approved.
  3. Construction: Remodeling means your home will be in shambles for days to weeks as the room is updated. You can choose to stay in a hotel — which means spending a few extra dollars — or stay in your home. It’s a bit stressful and loud — and it requires patience, which not every homeowner has.

Conclusion

What’s the best decision for you as a homeowner? Is it time to make the move into a new home, or is yours just in a need of a few fixes? Whichever you choose, get the finances, paperwork and appropriate professionals lined up before your proceed.

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Behind the Scenes of an Offer

So the buyer has finally made “the offer” on your property. Here’s a behind the scenes look at what happens next to get from for sale to sold.

March 2, 2015

Guest post by Cara Ameer with Coldwell Banker Vanguard Realty

The Offer: Every Coin Has Two Sides
So the buyer has finally made “the offer” on your property. For them, it’s the culmination of weeks, months or possibly even years of looking for just the right place. They’ve logged many miles, hours of research, gathered several opinions and may have consulted various “experts” as to what’s involved with all that they want or need to do to the house. They’ve reviewed the market data with their agent. They know when you bought the property and what you paid. They have a copy of your seller’s disclosure and have visually assessed the condition of the home cosmetically and structurally. Based on an analysis of recent sales and local market trends, the buyer has worked with their agent to craft an offer worthy of what they hope is a positive response.

For you as a seller, its a milestone in a journey of keeping the house perpetually clean, living through several showings and an array of feedback on your home. You’ve probably never heard so much feedback from the peanut gallery–agents and their customers. But in the end, the buyers with this offer have chosen your home as the place to have their life happen. It all comes down to this: will you accept, reject or counter the offer?

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What Happens Next?
The answer, of course depends. It depends on umpteen variables and scenarios, but let’s look at what happens once that offer is submitted.

It starts with effective communication from the buyer’s agent to your agent. Sometimes it starts with the presentation of a story introducing the buyer and explaining what has led them to selecting your home. It should be meant to entice and hopefully interest you in beginning a conversation regarding finding an acceptable price and terms that both sides can agree upon. This helps soften the process instead of just sending in a form with a bunch of numbers, dates and legalese that don’t convey any sentiment or personality behind it.

Before Responding to an Offer, be sure to ask these 3 Important Questions:

1. How much are the buyers offering and what will this offer net me?
2. How solid do the buyers look and what are the chances of this going through?
3. Are there any potential red flags or funky conditions of this offer?

Every seller has a target price or range they wish to settle on and you likely have yours. The seller’s agent is going to likely run a closing cost estimate for you that will project your costs based on the offer price made. There are closing costs associated with selling your home and they can vary depending on where in the country you are located. Once you know where things lie after closing expenses will help you in determining how to respond.

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From “For Sale” to “Sold”
Your motivation for determining how to respond to an offer may be driven by when you purchased the property, how much you owe, as well as other personal factors impacting your selling situation – are you electively relocating for a job or due to a corporate directed move? Is the move as a result of a life change – marriage, birth, divorce or death? You may also consider how your home compares in relation to its competition on the market as well as how long your home has been on the market and if you’ve had any other offers.

But in reality, as your agent will likely advise, “a bird in the hand is worth two in the bush.” The market is speaking by the nature of the offer made and it would be in your best interest as a seller to try to work with it. Getting the conversation started on price and terms will hopefully result in a meeting of the minds between you and the buyer. After the finer points have been worked out, you will be able to go from “for sale” to “sold” and toast to a new chapter beginning in your life.

To find a real estate professional to help you through the home selling process, visit coldwellbanker.com.