Do you feel like you need more space and are considering either moving up to a bigger house or adding on to your existing home? If you’ve been thinking about your options, the real estate pros at the Equifax Finance blog share some tips for thinking through each scenario, and discuss what to keep in mind when deciding which route to take, in the recent article, “Love it or List it?”
Deciding whether or not you even need more space is the first big step. If your children are bunking up together, multiple kids per room, with no privacy; if your home office is your dining room table; if you want to have more children but have nowhere to put them; or if your storage spaces are overflowing, it may indeed be time for a bigger home.
But should you add on to your existing home or move into a larger home? According to the article, it is almost always less expensive to add on to your existing home. If you are happy where you are, you can add on to your home in a way that exactly matches your needs/desires while adding square footage that increases your home’s value. You can often recoup the cost of adding that square footage down the road. The downside to a home addition project is that your home and family may be disrupted for many months while construction is underway, and construction often takes longer and costs more than originally expected. The article’s author recommends doing as much of the work yourself, if you have the skills to do so, to save money.
If you decide to sell your home and buy a new one instead, you have to go about it very carefully, conducting your research on the front end. Study home prices in your area so that you can get a realistic expectation of what you can sell your home for and what you should prepare to pay for a new home. You’ll be both a buyer and a seller, so need to protect yourself on both sides.
If you’re in a buyers’ market, you may have a large pool of homes for sale at reasonable prices, but you might have a hard time selling your own home. You may consider asking a seller to make your purchase contract contingent upon you selling your current home. A seller having a hard time finding a buyer may accept this contingency, even though it means waiting for you to find a buyer. You might not be able to find a seller willing to work with you in this way, though, so you should meet with a mortgage broker early in the process to arrange for financing, should you find a home, and need to act quickly.
In a sellers’ market, selling your house will likely be easier than buying a new one, so in this scenario, you may want to start by looking for a house to buy, and make sure you have enough cash to tide you over during the likely short period when you own two houses at once. Like the above scenario, you can also try to negotiate with the buyer of your house to have the sale contract include a provision that makes the closing contingent on you finding and closing on a new house.
Whichever option you go with, be sure to fully research your market, so you can make the most informed decision. Get more buying and selling real estate tips at the Equifax Finance blog, where you can also find tons of helpful articles on other personal finance topics, like credit, retirement, insurance, saving and more.