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Posted on Sun. Nov. 11, 2012 - 12:01 am EDT

To remodel or to sell

Weigh costs, needs, input from experts

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Al Taylor and his wife, Rolayne, know it’s not the typical reason people decide to remodel. But with eight kids, they really do need a bigger laundry room.

The couple already live in a beautiful, two-story brick house in the northeast Wyndemere addition. But in the last few months, they’ve spent a good deal of time pondering whether it would be better to move or stay put and redo for the space they need.

Houses with the features they want are selling for $1 million or more – well out of the couple’s price range – so the Taylors have decided to remodel.

“When we moved here, we had six children, and now we have eight,” says Al, 46, a utility company manager.

“We’ve looked at various houses that might be for sale, and even with four or five bedrooms, the kitchen doesn’t have a lot more room and hardly anyone thinks about a laundry room,” he continues.

“But we’re looking to make more of a locker-room style, trying to get the kids more closet space, and my wife, well, she’d kind of like to have the space for another washer and dryer because we do a lot of laundry.”

So, next year, the kitchen will have its back wall moved out, its island rotated 90 degrees and a front wall removed. The existing small dining room and laundry will be merged.

Taylor’s decision faces many people at some point in their home-owning lives: Should they remodel so they can love their existing home again? Or should they just go ahead and list it?

Remodel it

Builder and remodeler Lynn Delagrange, owner of Lynn Delagrange Inc. in Fort Wayne, says today’s more fluid family situations are inspiring many people to remodel. Not only are younger couples having additions to their families but adult children are returning home because of a tough economy and downsizing parents are moving in with their children, he says.

“When someone contacts me, one thing I want to make clear is that they need to factor into their decision whether getting a return on their investment is important,” he says. If they think they’re in their house of a lifetime, it might make sense to change the house to suit comfort needs rather than worry about recouping investment, he says.

“And there are a lot of people who are in love with their location – they love their neighborhood or they love their school or maybe their church and don’t want to move,” Delagrange adds, “so then it might make sense to remodel.”

Another reason to stay is if the home is in good condition and you could not duplicate the desirable features. Gina Zimmerman, a Realtor with North Eastern Realty Group, says Fort Wayne is chock-full of such properties – ones that may be older but are well built and need mostly cosmetic changes to seem less dated or reconfiguration of an existing footprint to be more livable.

But, she says, a lot of people don’t see the possibilities, which is why it’s a good idea to bring in a home staging professional or designer or architect for a consultation.

“There are certain things you can renovate. You can add a door to the outside, or knock out a wall to make better closet space or use the space from a jetted garden tub and make a walk-in shower,” she says. “You can bump out a wall.”

Sometimes, says Lynn Reecer, a Realtor with Reecer Properties, a full remodel isn’t needed. Storage solutions for closets, a wall grid system for a garage or adding built in cabinetry might solve the need for space.

“You can take a closet and with the new organization, you can fit twice as much in there,” says Reecer, who recently freed up her husband’s side of their master bedroom closet.

Finally, Delagrange notes, financing is key. With the continuing recession, many people find their budgets or credit rating doesn’t allow for getting the best deal on another house.

“What happens is, if you’re borrowing money, you have to go through the appraisal process,” he says. But, he adds, you may be able to remodel on a cash basis or with an existing line of credit or some combination of the two.

Sell it

Realtor Adam Smith of Coldwell Banker Roth Wehrly Graber says he’s remodeled “quite a few” homes over the years, but he says one of the biggest mistakes people make is underestimating the cost of remodeling.

“With construction costs today, you could add maybe 200 to 400 square feet and the cost might be $30,000,” he says. “You’ll end up with the most expensive house in the neighborhood, and it will be more difficult to sell.”

That’s because house prices are determined largely by “comps,” or the price paid recently for homes with comparable features, real estate professionals say. If there are no comps because the house is bigger or more luxe than others near it, buyers may be deterred because they can buy a similarly sized and priced house in a better neighborhood, Smith says.

“You could take that $30,000 and sink it into a whole new house,” he says.

Adds Zimmerman: “You can overimprove a house,” she says. If you have a $100,000 house and put in a $10,000 granite countertop, you can get in beyond what the house will bring. On the other hand, if you have a $300,000 house without one, you probably should put one in.”

Seek advice, she says. “A Realtor will help you know what is improving and what is overimproving and what each will do.”

Another reason to list is that mortgage rates continue to be low, Smith says. That means as a qualified buyer, you might be able to buy much more house than you expect with your existing equity even with a slightly lower selling price.

“Even first-time buyers are buying what I call 30-year houses as their first house. It’s not like what we’ve seen in the past where they started with 1,200 square feet,” he says.

Delagrange notes that lot-size restrictions are grounds not to remodel. It’s possible to finish a basement or raise a roof instead of building out, he says. But that can get expensive, and if there are encroachment issues with the street or neighboring properties, it might be better not to enlarge a house.

“That’s the case with a lot of lake properties,” he says, adding in that case, people often tear down and build new because of the value of lakefront property. But in other neighborhoods, he says, a solution could be to list what you have and have someone with smaller space needs buy it.

James Reecer, Lynn Reecer’s Realtor partner and brother-in-law, says the inconvenience of remodeling can be more formidable than expected.

“You’ve got the dust and the inconvenience of contractors going in and out,” he says, adding that he’s currently experiencing all that as he remodels his home’s kitchen.

“Most people who go through these remodels, … when it’s all said and done, they wish they would have made a different change than they did,” he says. “You have to know you love everything about your house and make sure the changes complete your wish list or you’re going to feel shorted.

“Listing means the possibility of making a good and disciplined purchase. You can achieve everything, or a high percentage of things on your wish list.”

Then there’s the lifestyle issue. A perfectly good reason to list a house is that you’ve simply gotten tired of the upkeep costs or chores, Zimmerman says.

“If you’re sick of leaves, if you’re at the point where ‘If I have to rake another leaf, I’ll scream,’ or if you’re at the point where a lot of people say, ‘My kids are grown and have big houses, so I don’t have to have all this space to heat,’ then a lot of people decide to downsize and list,” she says.

Do both

Lynn Reecer also likes this option and uses minor remodeling or updating a lot to sell homes.

“Lighting is a big deal,” she says. “If you have a 50-year-old home and the light fixtures are really in need of updating, you don’t have to go high-end just to give the house a fresher, newer look.”

Other upgrades she recommends are new hardware for kitchen cabinets, faucets, shower doors and carpet or wall colors.

“People who are coming into this area don’t know the contractors and they don’t want to deal with (minor remodeling), so they’ll go to the next house. We’ve seen it time and time again.”

Jill Sample, a Realtor and new-home sales and closing coordinator with Granite Ridge Builders, points out that certain remodels will up the value or salability of a home if you decide to sell later. At the top of the list is a redone kitchen, she says.

“If you have what we call an Allen County two-story, with a separate living room, a separate dining room and kitchen all on the same floor, you could open that up into an open-concept gathering room. It will pinch the wallet, but not as much as putting in footers, and open spaces are the hot thing right now.”

Also, Sample says, if the remodels include a new furnace or energy-saving windows or a new roof – what real estate pros call “condition upgrades” – do them. If those features are newer, they’ll help the house appraise for more whenever you decide to sell it – either next week or a couple of years from now.

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