This is your life, not just a financial asset.
Trying to decide whether to remodel or rebuild is one of the biggest decisions a homeowner can make.
We asked Kiersty Lombar, a Realtor with Best of Wilco Keller-Williams, how she handles this question as an expert in homes and property value. “The first thing I always ask is, ‘Why are you asking the question?’ It is important for homeowners to understand what they really want. My goal, then, is to find out what it is about your home or your living situation that is not comfortable for you and it helps to know why.”
She suggests being wary of trying to re-create something shown in a reality television show because while it looks fun and easy, it rarely is. “Keep in mind, if there is more than one camera on the show, it is more scripted than reality. They also use costs that are not likely to be accurate. Costs and rates vary greatly from place to place and may even be different in the next neighborhood over.”
Think about whether you are just unhappy with your current surroundings, then consider your divestiture plan for the house; i.e., a plan for getting out. If you want a fresh look with a trendy element, consider how long you will be in that home and recognize that over ten years, trends change. A lime-green countertop will be bright and fresh, but if you’re planning to sell soon, plan to replace it soon too. “Think about what makes sense in your time line,” she says. “If you make a choice that is taste-specific, you will likely want to unwind that to appeal to buyers’ diverse tastes.”
She also recommends doing the math with your comfort in mind; which decisions make sense for a living space that you want to enjoy. “A change does not necessarily have to pay you back when it comes to your own comfort. Make the change, and make your home the place you like to be, not just trying to make it nice for the next buyer, unless you are actually preparing to put your home on the market.”
The bottom line, Kiersty says, is to ask someone you trust and who is respectful of your feelings. A good realtor should be able to look at a room, and assess your financial and timing circumstances. That person should ask how long you will be there, your budget, and your goal. You may want to ask your expert which experts he or she would trust for their own house. People in the business get a sense for who is ethical and does good work. She also recommends asking more than one person; “Talk to your realtor, financial planner, and even a contractor. There is no one-size-fits-all. The same home in the same condition is a vastly different path for a newlywed couple than it is for a couple nearing retirement.”
I look at the time frame before divestiture and apply a traditional appreciation rate to let the client know what the future looks like.
While real estate is cyclical and unpredictable, I can look at a home owner’s budget, then historical data, and let them know the best and highest use of their money based on their budget.