Should I Renovate or Sell My House?

You own your home, but you're not quite happy with it. Maybe you're dreaming of more space for a growing family, a two-car garage, an extra bathroom, or a more modern kitchen. You may be wondering: Should I renovate my existing home or sell it and buy a new one?

Deciding whether to renovate or move is never easy — especially if you love your neighborhood and your community. While a renovation could turn your current house into the dream home you have always wanted — and potentially increase its resale value — a new home could offer you a fresh start and more space without the hassle and money required to renovate.

There's no right answer to the question of whether you should renovate or sell your home. If you're torn between upgrading your house or starting fresh in a new home, here are some things to consider as you weigh your options.

Renovate your existing home

If you're trying to decide if it makes sense to renovate your existing home, here are a few key things to consider.

Location

Do you generally like your home, your neighborhood amenities, and school district? If so, then renovating your house could be a good choice, even if you can't expect to recoup 100% of your renovation costs when you eventually sell.

Your long-term plans

With most renovations, you'll pay more than you'll gain back when you sell. That's fine if you plan to stay in the home for a long time, since you'll have ample time to enjoy the fruits of your investment — and you'll save yourself the time and money of buying and selling a home. But if you're planning on moving in a few years anyway, renovating may not be the best way to go.

Your priorities

Since you likely won't be able to afford everything, knowing where your priorities lie will help you stay within your budget — and get the most bang for your renovation buck.

Your budget

Before you start any work, you should determine how much you're willing — and able —to spend on renovations. Getting estimates from contractors can help you understand what you can reasonably accomplish given your budget. If you need to borrow money to pay for the renovation, explore available loan options, such as a home equity line of credit, home equity loan, or personal loan.

Consider resale value

All things considered, certain projects, such as a kitchen remodel or full interior paint job, often prove to be well worth the investment and time. The 2020 Cost vs. Value Report1 compared the average costs for 22 popular remodeling projects and how much of that cost homeowners recouped when selling in various different segments of the U.S. housing markets.

In the southeast United States, the average seller recouped:

• 77% of the cost of adding a wooden deck.

• 67% of the cost of a mid-range bathroom remodel.

• 59% of the cost of a mid-range major kitchen remodel.

• 59% of the cost of a mid-range master suite addition.

Taxes and utilities

While major upgrades may solve immediate space needs and add significant value to your property, those projects could also potentially increase your utility and property tax bills. Be sure to understand the energy and tax implications if you are planning to significantly upgrade your home.

Can you tolerate living in a construction zone?

Remodeling your home will mean a fair amount of chaos and noise. This can be difficult if you have a young child at home or a home office. And depending on what you need to upgrade, it may mean doing without a kitchen — or that second bath — for weeks at a time. If this won't work for you, buying a new home that better fits your needs may be the way to go.

Selling your home

If you're considering selling your existing home and buying a new one, you'll want to consider these things:

Can you afford to buy the type of house you want?

Before you make a decision, drop by a few open houses in your target neighborhood and also talk with a real estate agent. This will help give you a sense of the selling price of the type of house you want. At the same time, get an appraisal2 to find out your existing home's value. To make the best decision, you need to understand the cost difference between selling your home and buying a new home. It also helps to talk with a mortgage officer at your local bank to estimate what your new monthly payment would be in different scenarios.

What are the costs of selling, buying, and moving?

The cost of buying a new home isn't as straightforward as comparing the cost of your dream home with the potential sales price of your existing home. It also costs money to sell your home and buy a new one. You'll need to pay for closing costs on the new home, which can range from 1% to 5% of the purchase price.

And unless you have the time and skills to sell your home yourself, you'll typically pay a 5% to 6% commission to the real estate agent who sells your home.3 Then you'll have to pay to move your belongings from one home to another. Be sure you understand these costs before deciding on a strategy.

Is your dream house even available?

You may want a larger house, a more modern kitchen, a master suite, or a bigger yard. But the real question is whether or not what you want is actually for sale in your target area. Maybe most of the homes in your target area are smaller homes — or were built before large bedroom suites were fashionable. Or maybe most homes come on smaller lots. If this is the case, you may be better off renovating your existing home.

How competitive is the real estate market?

You should also consider how competitive the current housing market is. If the type of house you want is typically getting multiple offers, you may want to reconsider. Contingent offers are far less likely to be accepted in a hot housing market, possibly putting you, as a prospective buyer, at a distinct disadvantage. The alternative (selling and then renting while you shop for a new home) may leave you in limbo — and ultimately be more of a hassle than renovating your existing home.

Synovus can help you secure financing for your new home or a renovation. Find a branch near you to discuss your options.