1. Remodeling costs more than new construction: When remodeling a home, you not only have to build anew, but you have to tear down or modify existing structures. Trying to fit things into an existing structure can be two to three times as difficult (read: more labor) than building new. Older homes may not be square and plumb. Older lumber may even have different dimensions. Trying to fit things in without damaging existing structures takes time and effort, and thus adds to cost. It is easier to build a bathroom in a new home and to retrofit one in an older home.2. New Construction has cost benefits: When you are building five, ten, or twenty houses, there is a savings by building in bulk. You can bring in tradesmen and they can work non-stop, installing plumbing and electric work, and with repetition, do it more quickly. You can buy parts in bulk, too. In remodeling, everything is a custom fit and a one-time deal. And you are not buying your parts in bulk, either.3. Construction is a Hassle: The dirt, mess, and disruption from remodeling can drive you nuts. And one thing that makes it harder for the workmen is trying to remodel the home while the homeowner is still living in it. Moving out means renting a place, which means more costs.4. Remodeling Costs More Than It Adds In Resale: Real Estate Agents like to say that adding a kitchen or bath adds the most value to a home. But what they mean is that in terms of recovered cost, you get the most of your money back. You still lose money, though. Kitchens and Baths can return 90 cents on the dollar, traditionally, while other types of remodeling or additions (bedrooms, den) may return 50 cents or less.5. Cost Overruns and Contractor Problems: Everyone who remodels, it seems, has a remodeling horror story. Contractors walk off the job, they charge more than expected, they do shoddy work. You can expect at least some of these difficulties in any remodeling project. If you are not lucky, all of them.
1. Sun Rooms: Sun Rooms bear special mention. Adding rooms to a house because you think you "need more room" is often a waste of money. For example, many people decide to add a sun room to the house. Maybe they started off with a screened-in porch, and then decide to enclose it. So they hire the sun room enclosure people to come by and they put up an aluminum sun room. The new sun room becomes the living room, and the living room becomes this empty space that you walk through to get to the sun room - an empty space that merely accumulates clutter.And since such sun rooms are not heated or insulated, the homeowner then spends more money installing an air conditioning system or strip heaters, which are not very efficient, and as a result their utility bill skyrockets. And of course, all that sun makes it hard to watch TV, so the next thing they do is put blinds on all those giant windows to make the room darker. Pretty soon, the "sun room" is just another room in the house - a poorly insulated one at that.And pretty soon, the homeowner thinks, "Gee, we should put a screened porch off the sun room so we can get some air!" And then the process repeats itself again, as the screened porch gets enclosed eventually. The house starts to look like one tacked-on addition after another.Let porches be porches. Enclosing porches or trying to make living space out of them often ruins the architecture of a home and decreases its value. And the resulting rooms are often hard to heat, have cold floors, and often are maintenance nightmares. They were never intended to be living space.2. Converting Garage Space: It is tempting for many homeowners to covert garages into living space. This can be done in some instances without detracting from the value of the home. If the garage is built as part of the house, and is capable of being insulated and heated properly, it can add value, if the resultant space doesn't merely look like someone took the garage door off and installed a window in its place.Garage conversions which show their roots, with cold concrete floors, dramatic step-downs, and obvious door replacements may not add much value, and in fact may detract. Most garages face the road, and thus are part of the curb view of the house. Obvious garage conversions that are apparent from the street make a house look tacked together. If you are going to go this route, spent the money and re-do the fascia of the house (re-siding, matching brickwork, or whatever) so that a glaring seam doesn't appear where the garage door once was.3. Finished Basements: Finished basements also bear special mention. Many homeowners finish their own basements, which can be a good way of building "sweat equity" if you are handy with tools and capable of doing a good job. But poorly done self-remodeling adds little value. And quirky or oddly finished rooms add little value.Bear in mind that unless you have a "walk-out" type basement, with window or doors that can be used as fire exits, subterranean space cannot be marketed as living space (bedrooms) and thus adds little or nothing in value to a home. Dark basement rooms add little or no value whatsoever, so don't spend a lot of money finishing them off.Another problem with the basement remodel is flooding. Make sure that any basement space is dry and will stay dry, before you commit to finishing it off. One of my old bosses spent thousands of dollars finishing off a family room, complete with carpeting and a bar. He was so proud of it. Less than a week later, a torrential rainstorm came down, the power went out, and the sump pumps didn't work. The entire room flooded, and ended up tearing out most of what he built. It was a heartbreaking experience.If you have a walk-out basement and plan on putting in living space (bedrooms) think about adding a bath, or at least doing the rough plumbing for one. Subterranean bedrooms with no bath add little or no value to a home, and once you've covered everything with sheet rock and carpet, it is hard to go back later and add the plumbing for a bathroom. A neighbor of ours made that mistake, spending thousands of dollars to finish a walkout basement without roughing in plumbing for a bath. With a second bath, the house would have moved into a higher price bracket, and likely recovered most, if not all, the cost of remodeling and made the house more salable.
1. It is simple and fast. When the deal is closed, you move your furniture (which may have to be moved for a remodeling anyway) and within a few days or a week, you are settled.2. No dust, no dirt, no workmen in your home for a month: Pretty self explanatory. The movers, if you use them, are gone in a day.3. You end up with more value: If you sell strategically and buy strategically, and pay a reasonable market value for the new home, chances are, it will appreciate in value better than the remodeled older home. And yet the two may cost the about the same - the newer home may actually cost less than your remodeled older home!4. Better financing: A new mortgage may provide you with better rates, as it is a first mortgage on your new home. But trying to get a home equity loan for a remodeling is more difficult - and the interest on such a second note is a lot higher. Yes, it might be possible to refinance once the work is done, but then you have to go through two loan closings. Plus, cash-out mortgages may not have rates as low as purchase money mortgages.5. Strategic Buying: When you are buying a home in a neighborhood for the first time, you may be at a disadvantage, not knowing the neighborhood, or moving from out of town. But when you live in the neighborhood, you can spot the deals on the market when they appear, and jump on them.6. Fixed and finite costs: Unlike remodeling, which can easily go over budget, selling your old house and buying a new one is a known quantity. The numbers are all there on paper, and how the house will look and the quality of the workmanship are already known.7. Better Architecture and Curb Appeal: A larger home that is designed as a larger home looks better and fits into its neighborhood. There are no quirky add-ons or finished garages that are obvious from the road - improving curb appeal. Remodeled homes with poorly thought out additions can look awkward and be hard to sell. And well-thought out additions usually require the services of an architect, which is expensive.8. No permiting and inspection hassles: One of the hassles not mentioned above is permiting. Getting permits to build additions can be tricky, and getting the house to pass final inspection can be nerve-wracking. Many people compromise their remodeling projects to fit into permit requirements, which often results in odd-shaped additions. And if you addition is "not conforming" expect a nightmare of problems, particularly if even just ONE of your neighbors complains to the county.