Build on or move out?

Homeowners who are living in a home that no longer meets the requirements of their growing family have one of two choices to make: either they can build onto their existing home or find a new one that meets their needs, says Adrian Goslett, CEO of RE/MAX of Southern Africa.

“Although cost is often the primary consideration when it comes to these kinds of decisions, it is not always the only deciding factor. In fact, very often the decision is driven by emotion,” says Goslett. “Provided they have the space required to add onto their existing property, some homeowners may choose to stay in their current home and build on, even if it costs more than moving to a property that already has the necessary space. This decision is often based on aspects such as proximity to children’s schools, workplaces and sometimes the distance to other family members. In some instances homeowners could just love their neighbourhood and don’t want to move to another one, especially if they live in a sought-after area with no other properties available for purchase.”

Goslett notes that with prime positioning often a determining factor in the appreciation potential of a property, even if it does cost more to build on, the overall benefit in terms of the value added to the home could pay off in the long term. He says that many buyers often choose an area or neighbourhood over the property itself, because of location or convenience. “In some cases buyers purchase a property with the intention of renovating it or changing aspects of it in the future anyway. In these situations the choice of whether to move or renovate is far easier as it was already decided before the home was bought,” says Goslett.

He notes that essentially, the answer to the question of building on or moving out will be determined by different factors for different people and for each homeowner the decision remains a personal choice. “While some may have always intended to build on, others may have bought the property thinking it was perfect for them at the time and they wouldn’t have to change a thing. Still others may not have the space to build on and will therefore be forced to move to a home that can accommodate their new situation,” says Goslett.

He points out that both options have their pros and cons, however there are steps that undecided homeowners can take to help them weigh up which is the best option for them.

Goslett says that the homeowner should do some research and determine the value of their home in its current state as well as the money needed to complete the additions to the property. “The calculations of the amount needed for the building must include all costs such as materials and labour. There is also the cost of an inspector that may be required to sign off on plans where the structure of the property is altered. As a general rule with any renovation or building project, it is a good idea to add an additional 10% to the budgeted amount for any unexpected overruns in cost. Once the total amount has been determined, homeowners will be able to compare what other properties on the market offer for that price range,” says Goslett. “If they find a property within the price range that offers even more than what they are planning to do to their existing home, they may be persuaded to move even if that wasn’t their original intention. A better neighbourhood, an extra room or bigger garden could all enter into the decision process.

Alternatively they may find nothing in their price range that they like, making the option to renovate their existing property far more appealing.”

According to Goslett, a vital consideration when undertaking any building or renovation project is over-capitalising and pushing the home’s price far above what other similar properties in the neighbourhood would sell for. If the average home price in an area is R800 000 and a homeowner spends R200 000 on additions, they may not necessarily be able to recoup the money they spent. Building on is not always about adding value, but rather about improving the living arrangements for the current occupants of the home.

A benefit of building on is that to a large degree homeowners have control over the fixtures and materials used. However, even when everything goes according to plan, living through a construction period is going to be disruptive and challenging. There is also the chance that the building contractor does not do the job correctly or is unreliable. That said, moving is also not without its own challenges and costs.

“At the end of the day, while either option may appeal more to one homeowner than another, both options could ultimately result in the homeowner having the home they have always wanted,” says Goslett.

He provides a few more points for homeowners to consider:

When building is a better option:
• You love the location of your home and the neighbourhood
• You have the space to build
• You can tolerate living in a construction site or moving out of the house for a while
• You want to have complete creative control
• You have a reliable building contractor

When moving is the better option:
• You want to change your location for example, in search of better schools or a shorter distance to the office
• You can't face the disruption of construction
• The additions will cause your home to be overpriced for your area

Article from: www.remax.co.za

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