I need more space! Should I just sell my house and buy a new one, or should I add on? If I add on, what does that even look like?
These questions have been running through more minds in the past year than ever before. With this crazy market and Covid showing us just how small our houses can feel, the demand for more space continues to rise. Because of the challenges that can come with buying in our current market, even if selling your house for a mint is an option, staying put and adding on is also worth considering. Additions are a great way to get a customized space that meets your needs in the home you may already love but have outgrown; however, shopping for a different house or even building a whole new one can be fun too. Having been in this debate myself for the past year, I've learned a few things about the decision process I'd like to share.
First, ask yourself exactly what is needed. Another bathroom? More storage? Do you need additional living space (family room, sunroom, etc.)? Do you need additional private space (primary suite)? Do you need a better outdoor space (screened porch, deck, etc.)? Do you need a detached private retreat in the rear corner of your yard at the farthest point from your house because your family members are all driving each other insane?! Either way, start with your dream criteria, and then start narrowing the list of the must-haves. It’s important to list your priorities because regardless of your budget, it’s going to get blown out of the water, and you’ll likely need to make modifications or come up with more money.
Second, figure out how you intend to finance your project. As you consider your budget, realize that if you are adding on, even a sunroom and a bathroom, you are likely looking at a minimum of $80K. So, if you determine your budget first, you can be clear about finances when vetting your contractors. They will be able to tell you up front if you are out of your mind or within reason, help you rework your space, and figure how to best meet your needs within your budget. Maybe you have savings. Maybe you have a 401K or investments you can pull from. Or, if you’ve owned your home for more than 2-3 years, depending on your location, you may have a decent amount of equity to pull from, given how home values have soared in that small period of time. Cash out refinancing is also a great way to pull a large sum while not breaking the monthly budget. On the other hand, though, you are basically repurchasing your house for much more, so even though the appraisal will protect you from overborrowing, it’s not a terrible idea to give your agent a call and ask what your potential value would be after the addition and modifications.
Next, start gathering recommended general contracting companies from reputable resources. Ask your neighbors or anyone you know who has recently added on.. And of course, anyone on this team has a few good names for you as well. Call at least 5 or 6, given that some may not be able to take on the project in your time frame. After talking with these contractors, schedule them to come to your home and walk through your space with you. Be prepared to answer a few questions when you talk with them. They will want a general idea of what you’re looking for and what your desired timeline is. Be realistic here; everyone is backed up. No one will be ready to start your addition next week, given the permit process alone. And remember, tell them your budget and whether you have a cap. If money is no factor, just tell them what you want, and they’ll give you an estimated cost. Be prepared for your appointments. Plan for them to take about an hour each. If you have any questions for the contractors, have your list ready, and don’t hesitate to ask any and all. How far out are they booked? How long do they estimate a project like this will take? If you are reworking your utility area, how long will you be without heat/AC, water, toilet, shower? Beyond that, it best to shut up and let them take the lead. Their inquiries will prompt you to consider all of the things that you haven’t thought of and make a plan.
While you are waiting the typical 2-3 weeks for estimates to come in, you can consider all the aspects of the project that were brought up at your appointments. You may start realizing, if you haven’t already, just how invasive this project is going to be. Maybe you need to work out a place to stay for some period of the time when utilities will be off,or for the duration of the entire project. If you are redoing your kitchen, can you set your dining room up as a working kitchen for a few months?
As you receive your estimates, the contractors will go over them with you. This can be overwhelming, especially since the increasing demand over the past year has prompted a significant rise in the cost of building materials. You should get a minimum of 3 estimates, and don’t ever go with a contractor whose estimate is significantly lower than the others. That old saying, “You get what you pay for,” holds true in this scenario. The estimates will all likely be fairly comparable. It’s important to consider other factors when choosing your contractor as well. Have they had good communication with you through this process? Were they transparent about their costs? Were they helpful when you asked for ideas to help save on costs and how you could achieve most of what you are looking for while staying within a certain budget? All of these matters and more apply, and a good project manager is key!
Once you’ve received all of your estimates, you can consider your other option-- selling and buying. Give your agent (hopefully one of us of course) a calland tell them what you are thinking about doing. Schedule them to come over to discuss the current value of your home, the market that we are in and how to best navigate it, and what selling and buying would entail. We can make a detailed outline on what this would look like, given your specific needs, wants, timeline, etc.
Once you have all of your information, you can make an informed decision on how you’d like to proceed. Maybe you can’t wait to get started and are already deep diving into Pinterest for modern finishes and layouts. Maybe all of this research has solidified that you would most certainly like to move and don’t want to deal with an addition in any way, shape, or form. This market can be challenging, but we can help you navigate it. We can make a solid plan and get you into the right home that meets your needs while getting you the best price and terms for your existing home. Either way, you can make the best decision for you and yours knowing that you have put all of your effort into gathering as much information as possible.