I had an interesting meeting with a client last week that I felt many of you might benefit from. It began with their call: “Our house is no longer big enough to suit our needs. Do we renovate or sell? Will a renovation achieve what we want? And what would be the cost to renovate?” It’s a house they really love, and its location is “perfect”. In just four years of being in this house, and as many of you will relate, their kids grew up quickly, and in the blink of an eye are now teenagers who need more space.
I found out upon arriving at their house for our meeting that day, that they had no intention of calling me the day they did. They had decided to put their house up for sale; the call they were going to make was to a real estate agent. However a sudden moment of doubt, and with that the thought that perhaps a visit from me first, would be a worthwhile exercise to see if a renovation could keep them where they wanted to be: their current house. The call to the real estate agent was on hold…
Their plan was to buy something bigger, which would have meant one of two options:
– Purchasing a house in a part of town they did not like but was cheaper and would afford them that extra room, however that’s a compromise.
– Option two: spend a significant amount more to buy a bigger house where they wanted, which would mean a big financial commitment, which also comes with added pressure and sacrifices elsewhere; another compromise.
I wrote a couple of weeks ago about how to avoid falling into the renovation money pit. I had not seen this house before, so I knew I would either be delivering good news upon my visit, or – that renovating would cost them more than moving on.
Just like in Hollywood though, this story has a happy ending. I determined within an hour of being there that for $100,000 dollars, they could make better use of their existing space, only need to add a small amount of extra space to accommodate their needs, and furthermore I was also able to solve their issue of their living areas disturbing the bedrooms which sat right above them. I did some quick sums with them, and we worked out that after stamp duty and agent’s commission, they would be $70,000 out of pocket in selling this house, before even finding another. For just $30,000 more they got their perfect location, and their perfect house, the one they already own.
Had this story gone the other way, and I said the house needed too much work and their money would be better spent elsewhere, then that would still have been a good result. The alternative could easily have been heading down the renovation money pit, or spending a lot more on another house, when their best option was literally right above their heads.
The moral of this story: consider all your options first. Will a renovation cost you more or less than moving on or building something new? How do you know? Easy, speak to an architect before you make any drastic decisions. They will be able to inform you of the costs to achieve what you want, which will quickly tell you the most effective way to spend your money, and the best way to save it.