Owning a home is one of the key tenets of the American dream. So many people love the idea of passing down one to their kids, however, that doesn’t always happen. Homeownership can be a fickle and frustrating experience, and if you live someplace expensive, it can get overwhelming.
A survey by Angi, a home service platform, found that 41% of homeowners spend more than they expected on maintenance and repairs. The survey also found that 43% of young homeowners between 18 and 24, found themselves overwhelmed by the costs.
These realities raise an important question for struggling homeowners in expensive cities- deal with the cost of renovation or selling? In this article, we will explore this dilemma and try to make the decision an easy one for you. Let’s dive in.
Think Beyond Pure Return on Investment for a Moment
The most common advice you will receive when trying to make this decision is to pull out a calculator. You’ll be told to create a budget of how much you can afford to spend on renovations and compare it with selling. While that’s helpful and practical, it doesn’t address the dilemma that you might be facing.
This is because the idea of selling a home can be a hard pill to swallow for people. Your home isn’t an old Nissan Altima that you advertise on the Facebook marketplace. No, people raise families and create memories in homes. It’s going to be difficult to make this decision while thinking purely in financial terms.
So, how do you begin to think beyond ‘return on investment’? Well, you can do the next best thing, which is to think about the future. This is the only way to balance sentiment with practical considerations. Sit down by yourself (or with your family), and consider the impact and effects that renovating and selling would cause in the years to come.
Do you have kids or are you planning on some in the future? How do you think staying or selling will affect them? If you’re going to be renovating at a huge expense, think about the pros and cons.
The pros are obviously keeping your home and the bonus of staying in a nice city. On the other hand, it might also include cons such as making several compromises to your lifestyle. Similarly, selling brings considerations that you have to take into account. This brings us to our next point.
Sometimes, Selling As-Is Might Be the Only Option
If you’ve thought about the future and felt like renovating isn’t a good choice, then the best option might simply be to cut your losses. If you don’t have the budget for large and extensive repairs, or if the repairs won’t fix things for good, you’re left with selling.
However, even if you live in an expensive city like San Francisco, you have to remember that the housing market isn’t too great right now. Data shows that between December 2023 and February 2024, 17.8% of homes sold in the city went for a median loss of $155,500. This information comes from a Redfin report, with agent Christine Chang stating only people who really need to sell are doing it right now.
In such a climate, trying to find a good deal through conventional means can prove tricky. Ironically, this situation has become common enough that services exist for these scenarios. Simply run a search for the #1 local home buyers in San Francisco, CA.
John Buys Bay Area Houses notes that such providers will buy your home even if it’s badly damaged and needs repairs. The advantage here is that you can sell quickly, which is often a priority for struggling homeowners. Of course, just make sure you are not getting ripped off and get multiple quotes before you sign anything.
Likewise, never make the mistake of hiding problems with your home when selling. As Investopedia notes, selling the house “As Is”, will not exempt you from disclosure laws. So don’t risk it. In other words, be frank and honest when you’re listing out any issues with your property.
Talk to Professional Advisors
While you might not want to involve external help, sometimes consultants can show you unique options that can help. For instance, they can tell you if you are eligible for certain local and federal grants and assistance for renovations.
The HUD Title 1 property improvement loan program is one example. It’s ideal for homeowners who lack home equity for other types of loans and who need funds for essential repairs. There are other options like this as well.
Professional consultants can also help you get a more accurate picture of your property value. There’s a chance that your property could be worth far more than you’re expecting. Often, the quotes you get as a homeowner from real estate agents can be quite different from what your home is actually worth. This can give you new food for thought when trying to weigh the expense of renovations or selling, for example.
Consultants might even pitch suggestions such as turning the property into a rental. This can be a legitimate solution in an expensive city, where rental income can help pay off any loans you take out for renovations. The main idea is that professional consultants and advisors can give you options that you knew you had.
Yes, we know that spending money on them can feel like an added expense, but it just might prevent you from making a really bad decision.
All things considered, trying to decide what to do with a home that you’ve spent years in is not easy. In this economy, spending money on renovations can mean borrowing, and that’s not a decision to take lightly. Downsizing or even moving to a more affordable part of the country is something that more and more Americans are considering these days.
Just remember that some decisions are made with the calculator, and some decisions are better made with the heart. Think wisely, get professional opinions, and move forward with whatever you choose with conviction.
