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Moving vs. Improving
by Eileen Hastings

My husband and I bought our first home in 1992. We were a young couple with no children and fit comfortably into our cute one-bedroom, one-bath fixer. Today we have two children and a new dog and are still living at the same address. Fortunately, we are no longer crammed into the one-bedroom home we bought; we now enjoy four bedrooms and two and a half baths. We are part of the growing number of Seattle homeowners who have chosen to do extensive remodeling on their modest homes rather than sell and move to something better. Expanding the home was our plan from the start. Signing our original purchase and sale agreement, we had a clear vision of the second story we would one day build. But was it really the most emotionally and cost-effective approach?

Each of us reflects very differently on our home improvement experience. I think it was a huge success and I appreciate the connection I had to the process. He thinks it turned out well but isn’t convinced it was worth the time and hassle we went through. The irony is that I went on to become a real estate agent and he went on to become a contractor, yet I am the one who enjoyed the remodeling and he is the one who would rather have moved!

So how does one decide which approach works best? I asked some fellow real estate agents how they guide their clients on this issue. “Location is the main factor,” states Laura Hanson, a real estate broker with John L. Scott. “If you have a location that you want to keep, then you should seriously consider remodeling.” But the next question Hanson would ask is “Can you remodel your house without making it look ‘re-muddled?’” Some homes are well-suited for remodels that blend in beautifully. Others become horrible chopped up messes or a mishmash of materials and spaces. Architects can help pull together a smooth design, but for some houses it’s better to accept them for what they are and not try to make them into something they aren’t.

Theresa Sullivan, a former managing broker with Skyline Properties, focuses more on the dynamic of your home within your neighborhood. “If a person purchased a home that is the cheapest home in the neighborhood, they can easily remodel up to the value of the similar homes in the neighborhood.” If your home is about as nice as they come on your street, then remodeling is likely a financially bad move. “You never want to out-build your neighborhood,” warns Sullivan. Echoing her concerns, Liz Talley of Windermere Real Estate says, “If the improvements of the house can be supported by the other homes on the street, then remodeling by all means may be easier.” She follows quickly by saying, “Probably the bigger issue is getting a great contractor … and it can take up to a year to get on someone’s books … and everyone’s a little amazed about the pricing of doing home remodeling these days.” She pauses and concludes, “It’s probably easier to move.”

Kemal Akyuz of Loon Construction (aka my husband) advises, “Don’t over-customize — you won’t get the money back.” He also recommends avoiding projects that require new foundations. His experience is that simple additions and basement remodels are the easiest and most cost-effective ways to add usable square footage to homes in the Seattle market. “If it starts getting structurally complicated, it’s probably better to move.”

However, Charles Wright of Wright Construction works primarily on high-end remodels in some of Seattle’s wealthiest neighborhoods. Wright is confident that in that demographic, “remodeling almost always comes out advantageous.” When his clients try to save time and hassle by moving into a better home, they still end up dumping a bunch of money into the new house for customizations. Essentially they end up moving and remodeling. “They’re never going to find what they’re really going to want,” exclaims Wright, so he figures it works best for them to stay where they are and let him add or reconfigure whatever they want. “The exception to that,” Wright admits, “is when the whole house gets involved in the remodel. It can get so inefficient at that point that they’re better off moving.”

The high-end market Wright describes is a market where the homeowner is not as concerned with resale value. Obviously not everyone has that luxury and resale value often factors prominently in the decision of whether or not to remodel. Will the project add enough value to the house to cover the expense? Some basic Cost vs. Value™* numbers published by the National Association of Realtors indicate that bathroom, kitchen and basement remodels in the Seattle market tend to pay for themselves immediately in added home equity. Sunrooms and home offices tend to have a negative value return in our area.

Deciding what to do can be so difficult that many people talk of moving and/or remodeling for years and never do either. Diane Plesset, author of The Survival Guide to Home Remodeling, indicates that the average person thinks about remodeling for five years before initiating any project. Indeed, it can be the house itself that demands the action, when the roof finally fails and the owner decides to use the opportunity to add that second story or forever abandon the project and re-roof the home as is.

Is that how you want the design of the home you live in to be determined? If not, you need to identify the main reason you are considering either moving or remodeling. Do you want to remodel because you aren’t willing to leave your location or because you aren’t willing to leave your house? Is it because you think you can remodel for less than the cost of moving or is it because you think you can get exactly what you want by remodeling? Is it simply because it never occurred to you to move? Is your house really as special as you think it is? Is your location? Do you want to move mainly to add more space or because you want a different location, nicer spaces or nicer neighbors? Are you simply resisting change?

Let’s assume you need another bedroom and you are looking for the most cost-effective approach to building it. To accurately compare your options you have some research to do. First you need to look at what a house with the added bedroom would cost in the current market. Then you need to identify the price at which you can expect to sell your house, and what fees you can expect to pay. (A common rule of thumb in the Seattle market is to deduct 9 percent off the top for escrow, title, real estate commissions and excise tax.) Subtract the money you will have after you sell your house from the money you will spend to buy your new house, and you have a general idea of what the move will cost you. To evaluate the remodeling costs, you’ll need to detail the work you want to do on your house and then get bids from contractors. Be specific and read their contracts! Remodeling is famous for being behind schedule and over-budget, but selling your home isn’t an exact science either and you may get less than you expect or it may take longer than you thought it would. You need to be prepared for all of these possibilities. Also, when comparing options, don’t make the mistake of using the price of what you paid for the house rather than its current market value.

Personalities and lifestyles also inform the decision. Some people have little interest in or time to spend on the project and just want it to be done. They are good candidates for moving. Others like to do a lot of the work themselves and enjoy watching the remodel unfold and taking part in it. These people are well-suited for a remodel. Even so, many a solid relationship has been severely challenged by the stress of home remodeling. Plesset’s book describes home remodeling as “…one of life’s most emotionally trying experiences…” It reminds me of how exasperated I was by all of the choices and decisions our second-story addition required. When my husband asked me where I wanted to put the light switch in the master bathroom, I tearfully snapped, “Just put it where it belongs!”

Whether you choose to remodel or to move to a house more suited to your current needs, if you’re planning to be there five years or more, feel free to personalize it without worrying too much about resale value. I still wince at how my mother gradually replaced her cheerful yellow halls, bright blue kitchen and bold amber and burgundy dining room wallpaper with a bland neutral palate of soft grays and beiges to please prospective buyers. It was more than 10 years before she sold her house, and the first thing the new owners did was pull up dumpsters and gut the whole house. So many bland years for nothing. If you’re going to be there a while, I say paint your living room purple and put in a pool. They will both be terrible for resale but absolutely worth it if they bring you years of happiness!

*Cost vs. Value is a registered trademark of Hanley Wood LLC

Ellen Hastings is a local writer, real estate agent and business woman.

©2007 Caliope Publishing Company