To Renovate or Sell?

As homeowners, my partner and I recently found ourselves at a crossroads that some of my clients face: Should we renovate my beloved home to better suit our merging families and future needs as we age, or sell it and purchase a new property that meets our needs? This decision isn’t just about finances; it’s deeply personal.

Let me share the considerations that guided us through this dilemma, and hopefully, help you navigate similar choices.

The Case for Selling

Before putting your house on the market, it’s crucial to understand the associated costs:

• Selling Agent’s Commissions: On a property valued at say $850,000, expect to pay around $18,700 in commission fees, which is approximately 2% plus GST of the sale price.
• Advertising Costs: Effective marketing is essential for a successful sale. Budget around $3,000 for advertising your property.
• Staging the House: To make your home appealing to buyers, staging costs can run about $3,000 to $4,000.
• Preparing the House for Sale: This includes costs for painting, professional cleaning and touching up the property, averaging around $3,000+.

If you decide to sell and buy a new home, here’s what you should factor in:

• Government Fees: In Victoria, for a property priced at $1,000,000, expect to pay around $58,000 for stamp duty, transfer fees, and mortgage registration.
• Legal Costs: You’ll need to budget about $3,500 for the preparation of the contract of sale for your current home and conveyancing for the new one.
• Removalist Costs: Hiring a removalist will set you back approximately $1,000.
• Bank Fees: Plan for around $500 in bank fees, assuming no Lenders Mortgage Insurance is necessary.
• Interest Charges: Many people choose to use bridging finance when selling and purchasing. This often involves paying interest on the current loan as well as the interest on the new loan until the existing home is sold.

Pros of Selling:

• Opportunity for a Fresh Start: Moving to a new home allows you to start fresh without the stress of renovation.
• Possibility of Upgrading: You might find a new property that perfectly fits your family’s current needs.
• Potential Market Gains: Depending on market conditions, you could benefit from a rise in property values.

Cons of Selling:

• High Transaction Costs: The costs associated with selling and buying can be significant.
• Emotional Impact: Leaving a home filled with memories can be emotionally challenging.
• Market Risk: There’s always the risk of not finding a new property that meets your expectations or encountering delays in the purchase process.

The Case for Renovating

Renovating can seem like a more straightforward option, but it comes with its own set of costs:

• Engaging Professionals: Hiring an architect, drafts person, or builder can be expensive, with fees varying depending on the complexity of the project.
• Renovation Costs and Blowouts: Budget for unexpected expenses. Renovations often come with surprise costs that can escalate beyond the initial estimates.
• Type and Duration of Renovation: Consider the scope of work and how it will impact your living situation. Will you be able to stay in the house during renovations, or will you need to rent elsewhere? This can add to your overall costs and stress levels.

Pros of Renovating

• Personalisation: You can tailor renovations to your specific tastes and needs.
• Avoid Moving Hassles: Staying in your current home avoids the logistical challenges of moving and the stress of finding a new property.
• Preserve Sentimental Value: Renovating allows you to keep the home you’ve grown to love, maintaining your family’s emotional connection.

Cons of Renovating

• Potential for Cost Overruns: Renovations often exceed budget estimates, which can strain finances.
• Disruption to Daily Life: Living through a renovation can be uncomfortable and disruptive, especially with a growing family.
• Time Commitment: Renovations can be time-consuming, leading to extended periods of inconvenience.

Making the Decision

Ultimately, the choice between renovating and selling depends on a combination of financial, practical, and emotional factors. For some, the thought of moving and starting anew outweighs the costs and inconveniences of renovation. For others, the prospect of customising their current home and staying in a place filled with personal history makes renovation the more appealing option.

As for our own decision – We are still undecided. The process has illuminated the complexities and emotional weight of each option. While I continue to weigh the pros and cons, I’m here to help guide you through your own decision-making process by providing the facts. Whether you’re renovating or selling, feel free to reach out for personalised advice and support.