As new build jobs (also known as tear downs) continue to pop up in existing and established neighborhoods, more and more homeowners are calling to ask, “Should we add on to our current home, or just sell it and buy a bigger home?”
I really appreciate the question. A major remodel or addition should be considered carefully. Very carefully to be honest.
So as many of you may be having the same conversation around your dinner table, I thought that I would share with you a few things to consider when trying to decide if you should “love it or list it.”
1. What is it going to cost? This is a good place to start. One of the first steps should be to consult a reputable builder/contractor and get a bid for the work/addition. This is so important, and I will tell you why. It is heartbreaking for me to meet with a potential seller who has completed a major remodel only to find out that they will not get their money (cost of the remodel) back out of the home. For example, according to the Cost vs Value report for 2014, a mid-range family room addition costs on average about $86,000. However, the return on investment at resale is only $47,000. That is a 54 percent return. If you have enjoyed the addition for several years and are now selling, perhaps a 54 percent return will suffice. Conversely, if you just did the addition this year and are now contemplating selling, that number may be deflating for you. At the end of the day, our goal is to set a realistic expectation for the return on a major remodel or addition before dollar one is spent.
2. How will an addition impact my lot? Some of the lots in our beloved older subdivisions are not that spacious, therefore, if you add on a family room will your back yard be a 10 foot by 40 foot runway? Oftentimes we see additions that get so close to the lot lines that it looks out of place: Like someone picked up a house out of South Overland Park and dropped it in Prairie Village. The scale of a home in relation to the lot is very important for resale. One must also consult with local municipalities and HOA’s to see what codes and restrictions must be followed.
3. Does the addition/remodel make sense? An example might be, should a seller take a $250,000 Cape Cod and put a $100,000 addition on it, yet still have a one car garage? It is something to consider. There is a point where a potential buyer will decide not to spend over a certain amount if the home does not check ALL of the boxes for them. And what about the homeowner? Do they really want to spend six figures to add on to their home yet continue to scrape snow from their windshield from now until the cows come home? You have to make sure that the project fulfills your long term needs as well.
4. How long will the project take? If you have little kids at home, and your project is going to disrupt your home life for six months, might that be something to consider? As a dad with two little kids, my answer is a resounding yes. For some, it would be less disruptive to sell their current home and purchase a new home that fits their needs. Yes, it is still a major life change but a move is more like ripping the band-aid off whereas a remodel or addition is like slowly peeling it off.
Consulting the right professionals is crucial during your decision-making phase. Feel free to reach out to our team if you need the referral of a great contractor. Also, if you would like a copy of the Cost vs Value report for the Kansas City market, please email me and I will send you a copy. Lastly, I am happy to consult a homeowner when they are considering a major project. Please don’t hesitate to reach out. We are here to help.