All good responses here, I will just add --- It is very important to get an opinion of market value of your home with the remodel for your area/neighborhood. Depending on your location home values vary from 300K to 1.5 mil (if on the water).
The Haller Lake, Cedar Park, Olympic Hills, Lake City, Sand Point, Maple Leaf, Matthews Beach, Meadowbrook, Victory Heights etc. have lot's of Active listings and many are Pending sales right now. Some of these area pockets were hit hard with foreclosures which resulted in lower neighboring property values. You might find a property which is bank owned that meets your needs at a very reasonable price right now if you elected to buy versus remodel.
If you remodel, you will want to know what the completed market value will be, compared with the cost of the remodel. How long will it take to recoup the remodel cost and can you see a return on the investment for your neighborhood?
If you will have the nicest, most expensive home in the neighborhood, you will want to live in the home a long while so the neighborhood catches up in value. It will not be a short term investment. However, if you remodel and your home is not the nicest home in the neighborhood you will be increasing the value, making your home more marketable. A good Market Evaluation will help you keep form going crazy with the remodel and keep your cost in tact. A good architect as Mack mentions will be a good investment.
Best to you.
I would add to the conversation just one more consideration. When you are done, will it be something someone else buying in your neighborhood will want to buy? Chances are the size you are planning will not constitute an over improvement, but I've seen some home owner additions which were not well laid out or thought through for resale. Someday, your needs or situation will change. If your addition is unusual for the neighborhood, you will have a more difficult sale, typically below what similar sized homes would sell for. Good luck however you decide.
Here's the problem, Isbef. You can adapt a house, which comes with one set of compromises - or, within the same budget, you can sell your house and buy another which comes with its own set of compromises.
I probably do a half-dozen or so consultations like this per year. It is rare that there is a "clear winner" in the decision to expand or move - at least, from the financial end.
I do know some excellent architects and contractors that can help you sort out the design and financial side of the expansion.
Recently, I am getting inquires for clients that have smaller homes, bought when the market was robust(2008) and now have minimal or no equity. Additionally, their families have grown. Frankly, the construction/remodel scenario comes up because they cannot afford to sell and they need the space because of the growing family. You want to find out if you can qualify for a construction/ remodel loan before you go further. See if the construction makes economic sense. Can you afford this addition? Will you have instant equity after competion or will you be getting less than 100% on your construction project?
Truthfully, if you can find a home that is acceptable, my personal opinion is to sell/rent and purchase. I have credit approved borrowers for construction loans and afterwards, they scrapped the project and they ended up buying an existing home. Also, I have done the other scenario where they love the area so much but need the space so they add on.
Most of the time, based on my funded construction projects and future value appraisals, the subject property is worth more than the acquisition costs + improvements. We use the guidelines of acquisition costs + improvements OR appraisal whichever is lower. Obviously, you would have to have enough information(loan amout) to give to your lender to see if you could qualify for the loan. See if the project you are considering is even feaseable.
Good luck and contact me if you have any questions. (firstname.lastname@example.org)-NMLSR#636343
Feel free to contact me anytime to consult. I love to help people.
The average price per square foot in 98125, when purchasing a home, is $262.00. If you want to build, it's between $100 and $200 per square foot depending on your luxury.
I hope this helps!