A friend of mine lives in a small house on a large lot in an established neighborhood. His family is growing and he needs more space. However, he doesn’t want to leave the fabulous area he calls home. He is now faced with a very common, yet difficult question — does he stay and renovate or move and build a new home?
There are endless considerations when addressing the pros and cons of renovations versus new construction. Most people focus solely on the financial comparison and overlook legal and practical concerns. The following are several issues that should be addressed when making your decision.
The purchase of your new house will likely be contingent upon the sale of your old home. Negotiating your two contracts simultaneously will help avoid conflicts. If you sell your home and the construction of the new one is delayed, you may have to make temporary living arrangements. Or, you may find yourself owning two homes at once. While this may be an expensive option, it is often more practical to complete your purchase before your sale.
Renovation costs may be difficult to determine with certainty. If you buy a new house, you can be sure of the exact costs. As such, financing renovations can be more difficult than arranging a mortgage for a new home.
Looking to the future, property taxes on a new home are typically more than the taxes on a comparable home that was renovated. To calculate the true costs, you should also consider the carbon footprint of renovation versus new construction.
– Elias Metlej is a real estate lawyer with the Halifax firm Blois Nickerson & Bryson. You can write to Elias at firstname.lastname@example.org