Should you stay or should you go? Most of us battle the thought of upgrading our current house to our dream home or simply selling our house to buy our dream home.
The true reason why this thought ever came up in the 1st place is because were currently not happy on where we are or what we have at the moment and instinctively, we yearn for satisfying that dilemma.
According to Andrew Winter, host of the Foxtel program Selling Houses Australia (and the Extreme version), you may want to reconsider your options and think before you relocate.
Ask yourself what don’t you like with your current home. If it's the location and style, no matter how many rooms you add or upgrade, then you'd be better to move. However if its simply space and make, and the rest apparently suits - style, proximity and X-factors such as friends, schools and neighbours then simply expand. Compare what it would cost to move and what it would cost to remodel.
See if there’s more value in renovating your home or moving on. Estimate your costs to buy a new home. How much value can you add (less costs)? There are simple ways like adding a bedroom or a carspace and doing the landscaping - but you need to be convinced it will translate to a profit. Get some quotes form builders on how much the renovation will cost. Check out the cost of materials and fixtures you need to upgrade. If your upgrading you'll be surprised on the number of economical options you'll see on the online market like renovatorstore.com.au. An approximate square metre cost can range from $1,500 to $3,000, but that can always escalate. Consider restrictions to access for contractors. Sloping sites and extra heights will also add to building cost. And make sure to check it with your local council.
If your selling to relocate then include the selling and agent costs (packing , moving and loan financing).
Costs are involved in selling your current home and buying a new one which includes agent’s costs, marketing and legal fees and then stamp duty. Unlike other countries like New Zealand and the US, we have to pay stamp duty - and it is a major factor in considering swapping your house every now and again. Don't forget hidden items like if the buyer may ask you to replace the carpet before you sell. Or to replace appliances? Make sure you to include everything it will cost in time and money to sell your home and relocate. Then estimate what you may get for your house and how much cash you will have for a down payment.
Also consider that the housing industry isn't actually doing that great. RP Data research director Tim Lawless has been quoted as stating that ‘Melbourne’s apartment market had shown the greatest weakness over the month and could worsen as thousands of apartments under construction were completed’ (The Australian, ‘Property prices slump in most capital cities’, Nov 02 2012). With apartment prices dropping 6% and housing decreasing by just over 4% it would seem it is not a great time to sell.
Not to mention home renovations are on the increase. It was recently reported that more than half of Australia’s home-owners plan to renovate in the next four years. Makes sense considering the market – if you can’t sell it, you might as well create what you want with what you've got. And if the property market will not deliver you value growth, then grow it yourself!
When all is said and done, you may find you get more equity by staying in your home and renovating. You can actually get exactly the home you want without risking any buyer's remorse. How? Well simply estimate the cost of crucial renovations needed for you to stay. Decide what you like to do and go price-shopping at online home improvement stores like renovatorstore.com.au, They're swamped with economical and great finds that wouldn't burn your budget. Call contractors and get estimates. This is especially important if you need to add on extra square footage.
Though the business side of things may say that you may profit with a low cost house then reselling it higher after improvements like the Australian property investor who landed a place for just $15,000 in rural NSW and now has the property back on the market for $80,000. Buying low, renovating and then more than doubling your money by selling, is like finding a needle in a haystack for most investors. You don't always have a house that's less than the average credit card debt everyday.
Moreover in most cases that's just too much stress if your main goal is to buy that dream home you want. You'd still have to go through the frustration of having done so well getting carried away on renovating your kitchen to increase your house's worth just to realise it wouldn't be yours, and then re renovating the new house again since it's just impossible to buy a house that perfectly fits what you want - without needing renovations.