When considering whether to renovate or relocate, there are financial and non-financial factors to consider.
Financial Considerations in Renovating and Relocating
The non-financial issues include: (1) do you like your existing area and suburb or are you wanting to move out of the area; (2) do you particularly not like your home or conversely have strong emotional tie to it and prefer to stay put or (3) does your home have any features that makes renovating a no go – for example, the land size just doesn’t offer the space that you are wanting.
On the other hand there are financial issues that need to be weighed up when deciding between renovation and relocation. Selling your home and buying another home brings with it a number of hefty costs. In the example of Mr & Mrs Average who are looking at selling their home for $300,000 and buying for $450,000 they will have to pay out to third parties along the lines of:
- Agents fees: $7000
- Marketing Costs: $2000
- Stamp Duty Costs: $16,000
- Moving Costs: $2000
- Discharge Loan Costs: $500
- Legal Fees: $2000
- Loan Fees for new property: $500
This comes to $30,000. This is money that could be invested directly into your home if you were renovating rather than paying it out to third parties in the case of you relocating.
However, on the flip side if your home is today valued at $300,000 and your builder’s fixed price building contract is $100,000 – yet your market research tells you that buyers would pay $450,000 for your completed renovated property – then financially renovating looks like the better choice.
At the end of the day, it is usually about weighing up both the financial factors as well as those personal, more emotive factors to determine whether it is best for renovation or relocation.