Move to Improve

What to Consider When You Outgrow the Nest

By Iyna Bort Caruso

The architecture is stunning, the neighborhood ideal and the schools are highly rated. But the home that was once a perfect fit is now a tight squeeze. When there’s everything to love about your house but its size, it’s time to decide: move or improve. 


The benefits of each option are tempting. Renovating is an opportunity to custom fit your home to your lifestyle. On the other hand, moving to a larger estate lets you sidestep weeks or months of construction zone living. 


There is no right answer and certainly no easy answer, which is why experts advise isolating the many variables down to a few manageable decision points.

• Determine how a major remodeling will impact your home’s worth. If you already own the best house in a prestigious neighborhood, adding on to it will have very little impact on its value and might price the home out of the market when it’s time to sell. On the other hand, if yours is considered one of the more modest homes in an elite neighborhood, judicious improvements can return 100% or more on your remodeling investment, says Dan Fritschen, author of "Remodel or Move? Make the Right Decision."
   
• Factor in ancillary costs. Comparing the cost of a new home against the cost of renovation work is just the first entry in the spreadsheet. A major remodeling requires an architect, engineer and may necessitate the need for a short-term rental if construction gets unwieldy. Additional square footage added onto the home could also cause real estate taxes to rise. If you move, figure in staging, closing costs, moving fees and possible local or government tax implications on the sale. Some condominiums and co-ops impose a flip tax. In the United Kingdom, real estate transfers are subject to a Stamp Duty Land Tax, which requires buyers to pay the government a percentage of the sales price.
   
• Consult with an engineer or architect to understand all your options for expanding--even when those options may appear limited. In owner-occupied apartments, breaking through walls, floors or ceilings by buying an adjoining unit may seem like the only way to gain more living space but it’s not always so, says Charles Smith of United Kingdom Sotheby’s International Realty in London. He says ground-floor homeowners are digging down to create subterranean recreational space. Some have built elaborate squash courts, bowling alleys and indoor swimming pools. “It’s a fad and a fashion at the moment,” because in London, where home prices can run “many thousands of dollars a square foot,” even a pricey downward expansion can be a cost-effective alternative to moving.
   
• Revisit the market. If it’s been a while since you’ve looked for homes, values in the upper tier of the market may surprise you. “The biggest question to ask yourself is, ‘Can I buy something cheaper than what it would cost to renovate?’” says Jay Miller of Piedmont Sotheby’s International Realty in Washington, Va. “Unless you love where you are, a savvy buyer in today’s market can get a whole lot more house for the money compared to a major expansion.”
   
• Determine whether you have the stomach to withstand a major renovation. Will you be able to tolerate living in a construction site, or are you prepared to relocate to temporary quarters? And do you have the time to stay on top of the details? Even with a staff of professionals — architect, general contractor, interior designer, landscape designer — there is a myriad of decisions that need to be made. Bruce Irving, a renovation consultant based in Cambridge, Mass., and former producer for TV’s This Old House series says, “It’s very much a second job managing a renovation. If there’s not enough bandwidth for the homeowner to handle it, that can be a big red flag. Better to pay for work that’s been done elsewhere--in another, larger house available for purchase--than try to get it done on your own time.”
   
• List what you love about your current situation. The quality of the local schools or accessibility to private schools is a big issue for families. After that, it’s often less tangible but no-less-compelling perks that carry their share of weight. Having a favorite coffee shop within strolling distance or a big, beautiful shade tree in your backyard is the kind of lifestyle-enhancing component that can hold emotional sway.
   
• Consider potential sacrifices, both architecturally and aesthetically. Not all homes can “cope” with the creation of extra space, says Smith. “Is the house going to be unbalanced? You may be able to build up to boundary line, but when you’re finished, is it going to be underlanded?” Smith has seen urban homeowners expand at the expense of their gardens prompting them to wonder, “What have I lost here?” Also, consider the impact to your neighbors. If expanding destroys a neighbor’s view or impinges on his or her privacy, are you willing to deal with the consequences?

Where you start the decision process is almost immaterial, says Fritschen, “It’s a circle. Most people start where they’re comfortable, where their head is at.” But Fritschen stresses homeowners do need to understand how the decision relates to their long-term goals. “How much of the effort is for investment purposes, to add to a person’s portfolio and net worth? On the other hand, some people don’t care,” he says. “They just want their dream house.”

Property at top presented by London Sotheby’s International Realty