Remodel vs. Sell/Buy

Should we remodel or move?

This is a question that I get asked a lot from clients and friends in San Jose, CA especially in Willow Glen. We asked it of ourselves in 2005. At the time we had a a 1300 sq ft home with 4 br and 2 ba. (Translation, lots of bedrooms and not a lot of living space and no garage). The location is on a great tree lined street with charming homes, great neighbors and pride of ownership. At the time, we had one child about 1 yr old and the second was on the way.

Here are the factors that we used to make our decision:

First step for us was to get some drawings done to see what the possibilities are with your current floor plan. I have seen it cost between $1800 and $5000 for professional drawings (aka ones that you can take to the city for approval and start the permit process). You can speak with a draftsperson, architect or a designer. They should all be able to get you drawings if you bring them some idea of what you want.

Next, look at some homes. If you know where you want to live and what you want in a home, find a local realtor and have her/him show you homes that meet your criteria (and perhaps some that stretch your criteria a bit).

Of course, then the question of money comes into play. We would be selling for about $700K at the time and buying for about $1,100,000. We would have to come up with another $400K AND property taxes would increase.

On the other hand if we did the remodel, and doubled the size of our house, the estimates we ranged roughly from $300,000 to $350,000. Keeping in mind that a remodel is ALWAYS over budget by at least 20%, we figured the cost to be about $400K. That $400K is the same cost it would be for us to buy a new home. So it looked like a wash cost wise. Especially since the county will reassess your home after the remodel.

Once we decided to remodel vs. buy a new house, we had to decide how we wanted to go about the remodel. Basically the kitchen was not going to be touched and the bedrooms were not going to be touched so, we could live in it... Reality set in though when we thought about the mess, dirt and random people through the house while we are taking care of a newborn and a 14 month old! That stress factor, you need to consider what that is worth to you.

So, we bought a nice 3 bed 2 bath in the birdland area of Willow Glen across Almaden Expressway. While we lived there, we updated it so we could sell it easily. The work was completed about 9 months later and we put the house we were living in on the market. It sat and sat for about 5 months. We dropped the price ran the comparables and finally sold it for about $34,000 more than what we bought it for. It worked out for us as we came out ahead (barely!) of where we would have been had we rented.

My recommendation is to look at what is important to you about where you live, (size, location, schools, charm, neighbors) really evaluate your financial situation and talk with people who have done remodels and talk with realtors (or both). Get an idea of costs for both options and your level of stress in both options.

Holly Barr

Your Favorite Realtor

Coldwell Banker

(408) 887-3225

holly@hollybarr.net