Homeowners may contact you for help with a difficult decision. Their family has grown, and their current house is now too small. Or their children have flown the nest, and they’re ready for a more luxurious bathroom and primary bedroom. Whatever the need, they aren’t sure whether to stay in their home and remodel or sell their house and buy a new one that better meets their needs. This situation presents you with an excellent opportunity to win gratitude and loyalty while helping clients through a complicated process. Here’s how you can help.
What are your clients’ needs?
Encourage the clients to begin the process by carefully considering their needs. What is it about their current home that no longer satisfies? Is the kitchen too small for the needs of a growing family? Are they short a bedroom or two? Perhaps they’ve long desired an updated main bath. Help your clients clarify their desires and write them down.
Cost of renovation
Next, explain to the clients how to gather information on renovation costs. Ask whether they have the skills to do some or all of the projects themselves. If not, they should research and get referrals from several remodeling contractors.
Your clients should total the costs of materials, labor and permits as well as the effect on the cost of adding or subtracting upgraded materials. If they are considering remodeling more than one room or area, advise them to separate and itemize the expenses and prioritize the projects in order of importance. Remind them to consider the extra costs of living in a home under construction. For example, if the kitchen is torn up for a month, they should add the cost of extra restaurant meals during remodeling. If they want to remodel several rooms significantly, they may need to lease an apartment during construction.
An important factor the clients should consider is whether their renovation requires a structural change to a load-bearing wall. This can add enormously to the project’s cost and make the work exceed the capabilities of even a skilled DIYer. Plus, the city will want to inspect such a change.
Once the clients know what their remodeling project will cost, help them estimate how much the improvements will add to the value of their property and how much of their costs they can expect to recapture in a future home sale. Since it may take several years of overall property appreciation to recoup remodeling costs completely, the project may not be a good idea if the clients plan to sell within the first few years after remodeling.
Cost of selling and relocating
Armed with the cost of remodeling, sketch out for them the comparative cost of selling and buying a home that meets the needs they’ve identified.
Help your clients get a sense of both what they can sell their house for and what they would pay for a house that has the features they’re thinking of adding to their existing home. Be sure to account for the cost of selling: your commission and seller closing costs and then, upon buying, buyer closing costs, new mortgage interest rates and points, moving expenses and more. Nail down every cost of changing homes, then compare this amount to the cost of remodeling their existing property.
Consider non-tangible costs
Finally, remember it’s not all dollars and cents. Encourage your clients to consider the non-financial costs of remodeling or relocating. Does the family have deep emotional roots where they are? Are the schools, shopping, recreational options and amenities better at their existing location or the new one? What will a new work commute involve? Either choice can entail emotional, logistical and relational costs, so toss these aspects into the mix.
Making the remodeling-or-relocating decision can overwhelm clients. That’s why your professional experience is so valuable. Even if the couple decides to stay and remodel, you will have gained their trust and may have them as sellers and buyers in the future.