Are You Considering a Major Home Renovation?
Review all costs for both options
Moving
- The cost of physically moving, whether you’re getting 10 friends to help or you are hiring a full-service moving agency and the various closing costs involved in a new purchase.
- Repairs and upgrades to make your house sale worthy, even if it’s just a major cleanup and a little painting spruce.
- The increased cost of a larger home, in terms of down payment and mortgage costs, including bridge financing if you can’t buy and sell at the same time.
- Higher expenses in a larger home, such as heating, A/C, lawn care.
- Commission on realtor services, to make sure that your home sells for the best possible price.
Renovating
- If you’re renovating by making your existing space more usable, such as finishing your basement, count on $90 – $250 / sq. foot. It will all depend on how much space and what finishes you want. By the way, finishing certain basements can almost not be worth the bother. Like when? If you have your furnace and stairs right in the middle, if the windows are dismally small, if there is any chance of water damage to a foundation issue, if there are low ceilings (digging down to get more height? Add $60-85K)
- If you’re adding rooms through renovating, like adding a second or third story to your home, you can expect to pay about the same per square foot for the actual renovation, but there are other costs to consider. For example, in many cases, you can’t live in the home while the work is happening, so there is the additional cost of renting / leasing another space for the duration. At the very least, you might have to move a lot of furnishings into storage. If you’re not planning to live in the home for at least the next decade, this renovation will likely cost out as being too expensive!
- Other costs? Permits, tree protection zones, architectural blueprints, the cost of financing the renovation with a home equity or other type of loan. As always, you’ll want a cushion of about 20% of your total estimate because SOMETHING always comes up in any major reno project!
consider the feasibility of selling vs. renovating
Depending on where you live, it might be harder to sell your house than renovate. While this isn’t typically true in hotter markets, like Toronto, you need to speak with a local real estate professional who can advise you on the current market and show you some comparable sold properties in your area before making any final decisions.
If you are aiming to stay in your neighbourhood, but prices have increased, you might find that you are priced out of your current market, even with equity built into your current space. An acquaintance of mine recently sold her midtown Toronto home but could not afford a bigger space in the same area, so they left to find more space elsewhere.
Which brings up this point: if you’re leaning towards moving, don’t forget that there is also the emotional factor. Your family has ties in the community. The kids have their friends and schools, you have your groups and activities. There is a cost to losing that and you need to weigh that non-financial cost against the prospect of having a home that works for you.
So there are some important considerations, not the least of which is the money factor, to review before you decide whether to renovate or move. Talk to contractors and real estate agents to get some professional opinions on both options before you move forward. Either way, having the right home for your family for the longer term is an important priority that is worth taking your time on.
