Renovating or moving?

Asked by Bryan, Havertown, PA Mon Nov 5, 2007

With another child planned, our choice is between renovating and moving. If we stay, we'd need to add a 4th BR in our finished basement by subdividing it. We'd have a BR (maybe 12 x 13), creating a family room adjacent to that. We'd also want to add CA and either finish off the front porch or tear down the front wall, thus creating a 'great room' out of the current LR and front porch.

The other option would be to simply move, purchasing a 4 BR place that would either have a family room (for homeschooling) or area to create one, and at least the duct work for CA (no ductwork in our current home). The issue is mainly that the down payment would be challenging given we just moved here a year and a half ago, and that most of the homes that fit the profile we're looking for are out of our price range.

A few questions, then - is creating a situation that's a bit unusual (i.e., chopping up basement) bad for resale? (BTW, no 4 BRs near our house). What would you do?

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4
Rich Schiffer, , 19081
Mon Nov 5, 2007
You are in a situation that seems to call for a decision. Either you need to improve your current home, making it more suitable to your needs, or move to a home that is already more suitable. In your current home in Havertown, with only a little over a year's worth of equity, you are in a tight spot from a selling point of view.

Improving your basement won't add much in resale value (it is already a "finished" basement). Altering the layout of the basement won't significantly alter the value. Adding a powder room in the basement would potentially ad value, however.

As to the additional tax issue that one answer brought up -- It is my understanding that only rooms that are above grade (ground level or above) are considered when assessing the square footage in the calculations used to determine the real estate taxes. A room in the basement would not be considered a bedroom for most such purposes, for the most part (a few exceptions may exist, such as basements with a full walk-out. (not walk-up).

If you did decide to sell, you might want to consider an area where you can get more home for your money, or an older home that might need some work, but already has the number of rooms you need.

I know of at least one home in the Drexel Hill area that might fit that bill. You can use the reference link below to see some of the details. It has 4 bedrooms, and is on about a third of an acre, and the asking price is only 229,900. Built around the 1860's -- it has a lot of charm.

A home like that would need updating, and you would likely spend similar amounts in updating it as you would in renovating your current home. The difference is that one has a higher potential for you to recapture some of the cost when you resell (hopefully more than 1 year and a half later) than the other, and it has more ground, and more privacy to start with. If you are interested to see it, I think they will have an open house this Thursday, November 8, from 4:00 to 6:00.

Weigh all your options, and do what you ultimately feel is best for your family's needs, both long-term and short-term. A tough challenge, for anyone, to be sure. I don't envy you the choice you have, but I will try to make it easier for you by answering any other questions you might have.
2 votes
Edmund Choi, Agent, Paoli, PA
Mon Nov 5, 2007
Having been in the same situation, we opted for the move. Havertown is a wonderful neighborhood, but the challenges you face with a growing family are experienced by many. Renovation seems like a reasonable answer, but consult the township with regards to your plans (the township is strict). Have you contacted a few contractors(bonded and licensed) to estimate the cost? How did you intend on financing the project? Besides, a basement renovation has as much value as the next buyer will determine when you have it for sale; it's not the greatest cost vs value investment in smaller basements and contact the assessor's office to determine if there is any impact on your assessment.

Furthermore, with regards to selling and moving, have you determined the net proceeds (after transfer tax, marketing fees, etc.)? Will you be upside down? If not upside down, how much in reserves do you have available for a new purchase; don't forget that it's not just downpayment, but closing costs, reserves, emergency house fund, moving costs, etc.
Web Reference:  http://MainLineandBeyond.com
1 vote
x, , x
Mon Nov 5, 2007
If you have a basement bedroom, please make sure that the kid has 2 ways out when a fire breaks out, and a carbon monoxide detector and smoke detector since the furnace is down there.
1 vote
Mike Kelly A…, Agent, Santa Rosa, CA
Mon Nov 5, 2007
Bryan, I think you're going to see many folks in your position who decide to renovate than move. But you need to take a long hard look at what you'll have AFTER the renovation and how it stacks up against the rest of the neighborhood. If you're going to be totally overbuilt for the area then either DON'T do it or do it within a very sensible budget. Also, how does the reassessment of the property going to affect your tax bill? Where are you getting the money to do this? Credit cards? Equity line of credit?
There are some great web sites regarding home improvement. They show you the cost of certain additions/renovations and what % "return" you will derive from the work performed. Also, many give you a project cost analysis and a comparison chart to determine in the end what the TOTAL cost of the renovation is going to have on your end product and credit, month to month expenses.
If you love your neighborhood and can to the renovation and make it work then stay put! Consumers today NEED to live within their resources and STICK to their decisions. Here you are having moved just a year ago and are now thinking of moving again!! Hopefully this time around you'll give more weight to your decision and explore ALL the ramifications of your intended actions!!
1 vote
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