Elliot Eisenberg, The Bow Tie Economist, told me that 40% of homes in the US are free and clear of the mortgage. If not totally free and clear there is a whopping 45% who have over 50% equity. Who would those people be? They're probably Baby Boomers who've lived in their home 15+ years or investors.
Every homeowner considers selling at some point. The question is why would they sell? The National Association of Realtors says 80% of homeowners considered remodeling. There are lots of questions in deciding to stay or to sell.
Most people who have been in the home for 10+ years love their neighborhood and have a relationship with her neighbors. First, they’ll consider a few upgrades that immediately morphs into creeping scope. If you check posts on NextDoor, everyone asks for “a reasonable handyman for just a small repair,” the roof, a leak, a tiny carpentry repair. If I find one, I would marry him. Most homeowners don't understand that a tiny repair is usually in front of a big fat one. What's starts out as the kitchen remodel turns into a kitchen/Bathroom/Basement makeover. Once the kitchen is underway the rest of the house looks shabby. So while you’re working on the kitchen plumbing, why not add a bathroom? The real question is how much time money, and energy does it take for this transformation to happen? Will it turn my home into a dream home, or will it leave you wanting?
There is no right or wrong answer. Sometimes the layout works perfectly with a few updates. Other times, the layout is the problem. Last year I sold two homes because each of the sellers had knee operations. Their homes has second floor bedrooms, and they couldn’t do stairs. Moving was their only option. If you need a main floor bed and bath, and your current home has all of the bedrooms upstairs, that’s a major overhaul. Cost is another important factor. Most people under estimate what it costs and how long it takes for that transformation to happen. Since we are all trained by HGTV to think that is project should be completed in an hour under budget without surprises, we're headed for a bumpy ride. Where are you going to live for 6 weeks with all the banging and pounding going on? How do you plan on paying for the remodeling?
A successful remodel is much easier with both the professional designer or architect and a contractor. Contractors do not design, they hire subcontractors to lay floor, do plumbing, do electrical and paint. Unlike reality TV, they don’t decorate either. You want to be clear at the beginning exactly who does what, get a sworn statement and leave a little cushion for surprises. Surprise is a bad word in real estate, but we can't always prevent them from happening. A contractor estimates your project, and will come up with a final number. Then he'll give you a sworn statement of cost that shouldn’t vary in the process.
If you decide that remodeling isn't your best option, here are a few tips you need to know. You want to know how much your home is worth in today's marketplace and what you need to do to make it market ready. Online evaluations lie. They don’t mean to, but it uses cold hard data of location, square feet, # of bedrooms. Data hasn’t seen your home, the charming character, the fond memories, or the DIY sweat you put into it. Data doesn’t know that every buyer is trained by HGTV expecting that the Property Brothers crew ran through and pulled it together. They also expect that sellers are Marie Kondo devotees (Tidying Up with Marie Kondo) and intend to leave the home like a pristine Shinto temple.
Now comes the hard part, getting your home ready. Everyone under estimates how much stuff they have at home. I hear it over and over again, “Where did all this come from? How did it get into my house, did I really buy this?" For this reason I love Marie Kondo and hope she will save Americans from themselves. We are collectors, we are keepers, and eventually somebody has to deal with our stuff. Some of it is emotional of scant monetary value, and the rest of it has way less value than we hope. You'll have to take a hard look and make decisions about what to keep, and what goes. Three piles; #1 KEEP, #2 THROW, #3 DONATE. Divesting will be liberating and you'll find that your vision of a new life starts to come alive.
You’ll also want an estimate of how much you’ll walk away with from the sale of your home, and the best use of that money. You want a real estate agent that tells you the truth, what the value is its current condition, and what could be if you make some repairs. A lender will help review loan options. Your financial planner should be on board with how much to invest and how much should go towards a down payment on your next home. Putting all the proceeds from the sale of your current home into a down payment might not be your best strategy.
Selling and buying takes a plan. No one gets excited about selling until they have a vision of where they want to go. While you are prepping your home for sale you are keeping an eye on what’s available for your next step. You can write an offer contingent on the sale of your home with the understanding that your house has to be market ready, and not every seller will accept contingent offers, Your questions to yourself are; do I want to stay in the neighborhood, move someplace with warmer winters? How about single level new construction, a townhome, or a downtown condo? You want to know options for each scenario before you can get cracking on your new life.
That's what I do, help your vision become a reality and move you into your new life and new home.