Pros & Cons: Renovating vs Buying a New Home

Is it better to renovate a home or buy a new one?

Guest Post by Andrea Davis

After living in your home for a long time, you might decide it’s time to make a move. But if you don’t exactly have the budget for a new home, it might serve you better to remodel your existing home. How do you determine which is the better decision? Here are some considerations to help you make the big choice.

Questions to Ask Yourself

  • Is staying in your location really important? If you like the neighborhood you’re living in, you have the choice to renovate your home or buy a home in the same neighborhood.
  • Do you have the budget? In locations with affordable homes, you might lean towards buying new. In cities with expensive homes, it might be cheaper to renovate.
  • Can you renovate your home without changing the floor plan? It costs less to renovate your home — almost 50 percent less — when you don’t change the structural elements.
  • Will renovations increase your home’s value? Some remodels and changes increase a home’s value, while others are just money down the drain depending on your local market. You should always consult with a remodeling expert before you embark on big projects to see if they’ll add value.
  • What’s your long-term plan for the home? You shouldn’t make renovations to a home if you don’t have a long-term goal for it. For example, if you live in a two-bedroom house and plan to have a lot of kids, you’ll likely need to move sooner than later. Sometimes it’s just easier to move into a new home.
  • How does moving affect property taxes? Property taxes vary by county, and moving into a new home might mean an increase. Check with a real estate agent and the city itself before to make sure you wouldn’t be paying more taxes as a result of moving.
  • How is your mortgage affected by a move? Buying a new home could mean a lower mortgage, depending on market conditions. You could also end up with the same mortgage — you’ll need to see what real estate pros say and what your best deal could be.

Weighing the Pros and Cons

Once you’ve answered some of these questions, you might be leaning more towards one decision than the other. If you need more information on renovation versus buying a new home, here are some of the pros and cons of both decisions.

Relocating

Selling your old place before searching for a new place can be a long, extensive process with an exciting result. And it can be both stressful and arduous if you don’t approach it correctly. Here are some of the advantages and disadvantages to weigh in the process:

Advantages

  1. New beginnings: You get to start over in a new place — whether it’s down the street or in a new neighborhood, city or state — beginning again with your family and belongings. You get to meet new people, decorate your new home and settle into a new landscape.
  2. Financing options: Once you’ve bought a house the first time, it’s easier the second or third time around to go through the paperwork and purchase process. Your agent will help with title, insurance, taxes and finding a quality lender to help you buy the house.
  3. Income taxes: Depending on your state laws, selling your old home could land you extra money in your pocket without added taxes because of the capital gains exemption (which is up to $250,000 and $500,000 for married taxpayers). There also are eco-related tax credits available if your new home qualifies. You should check with your real estate agent and tax filer.
  4. High costs: Selling a home involves paying your real estate agent and other fees throughout the process. It’s long, complicated and expensive, and you have to be willing to go through it to acquire your new place.
  5. Moving: Moving can be a problematic process because you always find stuff in your old place that you never used. That leads to sorting, throwing away and trying to pack everything within a short timeframe. It’s added stress that can be overwhelming at times.

Disadvantages

  1. High costs: Selling a home involves paying your real estate agent and other fees throughout the process. It’s long, complicated and expensive, and you have to be willing to go through it to acquire your new place.
  2. Moving: Moving can be a problematic process because you always find stuff in your old place that you never used. That leads to sorting, throwing away and trying to pack everything within a short timeframe. It’s added stress that can be overwhelming at times.

Remodeling

While your current home may seem drab at times, remodeling the space allows you create new spaces, update its function to meet your needs and create an ideal home, depending on your budget. However, it comes with a lot of disadvantages that may or may not be worth the investment.

Advantages

  1. Costs less: The cost to remodel your home is less than buying a new home because it’s on a room-by-room basis. You don’t have to remodel everything in your home, which means your budget can flow with what you need to do. Moreover, there are ways to save money on your renovations so that you get a great end product without spending a fortune.
  2. Personal touch: Renovating allows you to change your existing home to meet your personal expectations and desires, as compared to buying a new home that may have a few features you want but not at all. Why spend hundreds of thousands on a new house and update it when you can keep your old home and update it a little at a time?

Disadvantages

  1. Not for major overhauls: If your home needs a complete do-over, then a remodel isn’t for you. It’s not worth the investment to spend thousands of dollars to change every single room in your home when you could buy a new house with all of the updates. It’s better to renovate a few rooms in your house rather than all of them. It’s also not worth it to remodel your house if you’re trying to downsize.
  2. Financing issues: Remodeling requires a homeowner loan, family loan, payments to contractor or vendor loans. You must have home equity, so if you haven’t lived in your home for a long time, it could be hard to get approved.
  3. Construction: Remodeling means your home will be in shambles for days to weeks as the room is updated. You can choose to stay in a hotel — which means spending a few extra dollars — or stay in your home. It’s a bit stressful and loud — and it requires patience, which not every homeowner has.

Conclusion

What’s the best decision for you as a homeowner? Is it time to make the move into a new home, or is yours just in a need of a few fixes? Whichever you choose, get the finances, paperwork and appropriate professionals lined up before your proceed.

Andrea Davis is the editor at HomeAdvisor, which connects homeowners with home improvement professionals in their area for free. Connect with Andrea on Google+

Cover image via palm custome builders

Lindsay is the the Director of Media Engagement for Coldwell Banker Real Estate and manages the brand’s media and social media department. She is also a licensed real estate professional. In 2017 & 2018, she was named a top 20 social influencer in the real estate industry in the annual Swanepoel 200 power rankings.

Lindsay lives in Livingston, NJ with her college sweetheart and now husband Joe and rwelcomed another Joe into her life as she became a mom in June 2016.

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14 Comments

  1. LA-Remodeling
    April 13, 2015

    Great article

    Reply
  2. Rescon Basements
    May 20, 2015

    Remodeling or finishing the basement is a great way to add space to your home if you are looking to increase space. And don’t be too concerned with getting a return on your remodeling investment costs; some homeowners remodel and understand they won’t gain 100% return on the cost. Remodeling your home and staying in it for reasons all your own, that can be priceless to you!

    Reply
  3. Maggie Allen
    March 10, 2016

    Thanks so much for sharing all of this advice on whether to stay in our home, or to move. My husband and I have been renting out an apartment for a long time now, but we’re starting to feel like we’re just throwing our money away. In all honesty, it would be really nice to actually finance a home so that we can be putting money into something we will own. Plus, I don’t think moving would be too hard for us!

    Reply
    • Lindsay Listanski
      March 11, 2016

      We are so glad you enjoyed the post! Reach out if we can help at all!

      Reply
  4. Derek Mcdoogle
    October 13, 2016

    My wife has been gloomy lately because she thinks our house is a little bit gloomy. You mentioned that while your current home may seem drab at times, remodeling the space allows you create new spaces, update its function to meet your needs and create an ideal home, depending on your budget. Are there certain rooms that people should start with when remodeling? Hiring a remodeling contractor might be a good idea.

    Reply
    • Lindsay Listanski
      October 14, 2016

      Hi Derek! Thank you for reading my post and I do hope that some tweaks around the home can bring brighter days for you and your family! I think you can find a balance between remodeling and redecorating. Redecorating will probably be more affordable. Choosing the right paint colors, comfortable furniture and even adding some smart home technology can make a HUGE impact! In regard to smart home tech, smart lighting is something that can do wonders for a home in terms of boosting a mood both on the color/shade they are set on and in some cases even the music they can play.

      I also highly suggest starting with the rooms you spend the most time in! The bedroom, your kitchen and living room are three great places to start. Happy to continue the conversation offline if you need help! LL@coldwellbanker.com

      Reply
  5. Shad Morris
    November 4, 2016

    There are a few aspects of my current house that I would love to change, and I just wanted to make sure that it was a good idea. It’s interesting that remodeling can actually be cheaper than buying a new home. Since there is a lot that I love about my house, it would be nice to just change what he don’t.

    Reply
  6. Zequek Estrada
    December 20, 2016

    My husband and I are on opposing ends when it comes to buying a new home or fixing up the one we live in. However, I can see why he would prefer to buy a new home. It’s really is quite an adventure when you’re starting over in a new place. That advantage alone is quite appealing since I do love change.

    Reply
    • Victoria Keichinger
      December 21, 2016

      There are certainly pros and cons to both. We wish you the best of luck with whatever you decide and if you do decide to buy a new home, please let us know if we can help!

      Reply
  7. Francisco
    January 29, 2017

    Hi. I’m looking to buy a new home from GlHome in Thornton Co I’m a first time buyer an i been looking for old homes that cost a little over $300,000.00 But this new home are $332,000.00 an are new it’s the same Price can you give me some advice if I’ will do the right choice? In getting the new home?

    Reply
    • Victoria Keichinger
      January 30, 2017

      Hi Francisco, Congrats on finding not one but TWO homes you love. The best person to help you weigh the pros and cons of your home buying situation is your real estate professional. If you need help finding a Coldwell Banker real estate agent in your area, please let us know!

      Reply
  8. Scott
    February 21, 2017

    I like that you point out that one of the reasons to consider adding on to your current home is that you can give it your own personal touch. My parents have been talking about whether they want to add a room to their house or move to a bigger one. They have lived in their house for about 30 years. I’ll have to point this out to them the next time I am over there.

    Reply
  9. Barbara Herbert
    May 4, 2017

    Practically renovation is the way to go but if you need more space or the house is too crowded for your family, a new house is needed.

    Reply
  10. Mark19
    June 7, 2017

    Hello, do you allow guest posting on blog.coldwellbanker.com ? 🙂 Please let me know on my email

    Reply

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