To be fair, as a group of people who get paid to help you sell and buy our advice may be biased. If you were to post this question on a home improvement site, you may see the opposite bias.
The main reasons I would recommend selling versus renovating is that I've seen so many of these that just turned out poorly. You can add a room or expand one room, but the other rooms, hallways etc are all still the same.
The costs of renovations are not just financial. You will be living in a construction site for an undetermined amount of time. This causes stress and discomfort for you and everyone going through it. Some folks just move out to get it done quicker and then you add the rent of your temporary location to the cost of construction. If you are doing your kitchen as part of the process, you'll be eating out more which while nice for a special occasion, gets old when it's every night.
One more factor is that by adding on you are not maximizing the current affordability gap, which is very favorable. Prices are starting to climb, but rates are still low. If prices go up 10% in the next year, a $300,000 house will be worth $330,000 but the home you may want to buy now at $400,000 will be worth $440,000 which means you are $10,000 further away than you are now. Add an interest rate jump to that and you could be pricing yourself out of the market.
Finally, few renovation projects return more than they cost. Cosmetic fix ups make a home marketable, but dropping $30,000 into a new kitchen may not get you $25,000 in a year.
All this said, it really depends on what you want out of the move or renovation.
If the home is too small as it is at this time, and you really will just renovate and update the existing
floor plan, but you really would want a bigger home, then you should probably look at two items
what will it cost to expand and upgrade the current home, and then compare to what the bigger home
will cost in your area, just depending on your market and whether you will find a home that you like
bigger and with the right floor plan and updated.... and then you know where your current home is
located, you still do not know where the bigger home will be...
you need to work with a local Realtor, who can first give you a written detailed market evaluation of
your current home, what you can list it for and what it will finally sell for, and deducting all your expenses, what the potential net to seller will be.
Then you know what finances you have to work with to look into the surrounding market for a larger
home that will fit your needs and your taste, and the Realtor will be able to provide you information
via e-mail and you can then also see some of these homes... Do not try to figure this out all by yourself. For upgrades to you own home, you may need several local builders to give you an estimate for the exact same things you will want to change, that number should also influence your final
Also it depends what you still owe the bank and for how much you can actually sell your current home.
Once you have all the insights, only then can you make an educated decision for your family.
If you need a recommendation of a good Realtor in your area in Seattle, let me know I gladly send
one your way.
Edith YourRealtor4Life & Chicago and Northern Illinois Expert
Working always in the very BEST interest of her clients, Buyers, Sellers and Investors alike....
And always with a SMILE ïŠ
Covering for @Properties the city of Chicago, all N and NW suburbs, the fine homes on the
North Shore, and many of the W and SW suburbs, and with her trusted Partner Agents all of
the US and worldwide properties. Edith speaks French, German, some Spanish and other.....
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HAVE THE MOST WONDERFUL DAY :)
If it just needs updating, that may very well be the way to go. Just make sure you get the work done with permits that requires permits.