Should you remodel or sell your home?

If you live in an area where home prices are rapidly increasing, it may seem there are many cost advantages to renovating. You may be able to add an addition on for less than you could buy a bigger home.

But it is it better to move? Conventional wisdom is that the fewer times you move the better. In most cases, you end up saving money by staying in a smaller, older home than moving to a bigger, larger one.

Making the decision to remodel also saves you the costs of selling your home, buying a new one and moving. Experts say these costs alone cost about 10 percent of the value of the new home.

Most move-up homebuyers pay more in utilities, insurance and property tax. The person who stays in their home may be better off financially investing the difference between the current mortgage payment and what they would pay for a new home.

A 1998 Wall Street Journal study found that the cost of maintaining a home are a lot more than most people realize. Researchers found that keeping up the average home over a 30-year period costs almost four times the home’s original purchase price! For some people who aren’t committed to doing home-improvement projects, the costs could make renting a better deal.

Consider moving if you find a new or fully remodeled home in a neighborhood that has high resale values. You may be able to come out ahead every time if you do so. However, understand that you’re taking a gamble. There’s no guarantee that your property will hold its value no matter where you live.

Take into consideration other factors besides money. You may love your neighbors or be very attached to your home, especially if you’ve put a lot of work into it and your landscaping.