Innovation or Migration?

    The kitchen and bathrooms were outdated and cupboard space was becoming a problem in John and Nicola Coetzee’s three-bedroom home in Blairgowrie. They had considered moving but they both liked the fact that their home was situated close to their jobs in the financial hub of Sandton, but still had the charm of a quiet community suburb. So they decided to renovate and transform their current home into the contemporary home they had always wanted.

    “We had to make the decision to stay and renovate or move to another house. We both love the location of our home and our neighbourhood so decided that we would rather stay where we are and just improve on what we already had. Although living through the construction period was difficult, we are happy with the results and now have a home that meets our needs,” says John Coetzee.

    Adrian Goslett, CEO of RE/MAX of Southern Africa, says that many South African homeowners are faced with this question and will have to confront it eventually, and for every one that decides to stay and renovate there is one that decides to pack up and move.

    “The answer to the renovate or move question will be different for everyone as it depends on so many factors - for each homeowner it will be a personal choice. Some homeowners may have purchased a property with the intention of renovating and building on, while others may have bought a property that was perfect for them at the time, but now no longer meets the requirements of their growing family,” says Goslett.

    Both options have their pros and cons, but there are a few steps that homeowners can follow to help them tackle the renovate-or-move question.

    According to Goslett, the first step would be to do research and determine the value of their home as well as the amount needed to complete the necessary renovations. This amount must include all costs involved in the renovation such as materials and the cost of the builder. In some instances inspectors may be required to sign off on plans where the structure of the home is altered.  Goslett advises that it is a good idea to add an additional 10% to that amount for any unsuspected overruns in cost. Once the final figure has been determined, homeowners can then compare other properties in that price bracket. “Homeowners may find a property within the same price range that meets all their requirements or perhaps one that has even more for example, an extra room, a larger garden or one situated in a better neighbourhood. They may also find nothing that they like in that price range which would mean that staying where they are and renovating would be the better option. Either way, once they look at other comparable properties that are on the market, the decision will become a lot clearer,” says Goslett.

    He notes that another important aspect that homeowners should consider when renovating is over capitalising and over pricing the home in comparison to properties throughout the rest of the neighbourhood. If homes in a particular neighbourhood are selling for R600 000 and the homeowner spends R200 000 on improvements, they may not be able to necessarily sell their home for R800 000. Goslett says: “Many homeowners won’t recoup all the money that they spend on renovations when selling their home. However, the decision to renovate may not always be for the purpose of increasing the value of the home for resale, but rather to improve the home for the current occupants. It’s a decision that is not always determined by cost, but rather by emotion.”

    Many homeowners that do choose to renovate do so simply because they like where they live. They may have grown up in the area, they like the schools for their children or like the proximity to their jobs. And major benefit to renovation is that the homeowner has complete creative control and can chose the fixtures and materials used. However, even when everything goes according to plan, living through a renovation period is going to be disruptive and it can be expensive. There is also the chance that the building contractor does not do the job correctly or is unreliable.

    On the other hand, moving does not come without its own set of challenges and costs. Aside from having to sell one property to buy another, there are costs such as transfer duties and legal fees, electrical certificates and the like.                  
    “When all is said and done, both options have their pros and cons, and both options can essentially give homeowners the home of their dreams,” says Goslett, who provides the following guideline to assist those looking to answer the renovate-or-move question:

    When renovation is the better option:
    • You love the location of your home and the neighbourhood
    • You can tolerate living in a construction site or moving out of the house for a while
    • You want to have complete creative control
    • You have a reliable building contractor

    When moving is the better option:
    • You want to change your location for example, in search of better schools or a shorter distance to the office
    • You can't face the disruption of a renovation
    • Renovations will cause your home to be overpriced for your area.

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