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Remodel or Rebuild? In many cases it’s a tough call.

In this time of underwater mortgages and people out of work, life still goes on. Families grow, needs change, and with them the requirements and desires for a home change as well. When considering any major remodeling or rebuilding project ask yourself these questions:   
  • Do you love the neighborhood and is your family established there? 
  • Is the current house structurally sound? 
  • Does the current floor plan/layout generally work for your family’s lifestyle?
  • Is the architectural style acceptable and desirable?     
  • Is your objective to add space, reconfigure, update – or all 3? 
  • Upon completion, would you end up with the best house in the neighborhood?
  • Do you have the time and patience to deal with the process?
 

Great Valley Center, Flickr

Money, of course, is usually a limiting factor. Even if your income can justify the larger mortgage, financing construction can be a much more difficult task. But – for the sake of this discussion, let’s assume you can afford it, the neighborhood values can support it, and you’re willing to make the time to get a home specially built or remodeled. 
 
The expression, “throwing good money after bad” was never more fitting than when considering a major remodel.   You’ll find many a real estate publication quoting net return upon sale for such things as kitchen remodels, master suite additions, sun room additions, etc… average 50-60 cents on the dollar.  Less often do you see the math on tearing it down and starting over. But it’s not unusual to hear the remodeling story concluding with, “we could have built a new house for what it cost us.” 
 
Since moving is always an option, tearing a house down should really only be considered under a couple of circumstances:
  • The existing house is small enough or in such a state of disrepair that the substantial portion of the property’s value is in the land.   
  • The average values of the immediate neighborhood are substantially higher than the existing residence such that a new home’s value would be comparable.
 
This brings up the question of just what it all costs which, more than anything, might drive your decision. 
  • New construction costs can vary by location, building site, design, finishes, and landscaping. Putting together a “wish list” and discussing with a good architect should yield you some rough numbers upon which you can begin to determine the feasibility. Clip some magazine pictures of what you have in mind. Better to find out now what these things cost. While modest homes may be built in the $150/sq ft range, it is not unusual for upscale custom homes to be $600/sq ft and more. This does not include the cost of land (or in your case the cost of your original home.) The devil is certainly in the details!
  • Remodeling is even more difficult to estimate. Again, put together a wish list, but have the discussion with the architect not only about costs, but the value of the finished home. It might be wise to ask your real estate agent to weigh in as well. 
 
Designing your dream home can be a labor of love, or a path to divorce. Take care to consider all aspects of the process allowing adequate time, resources, and personal tenacity to see it through. You will find the number of decisions staggering even with the best professional help. But, design matters!
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