Love It or List It: Deciding Whether To Renovate or Sell Your Home

, Mar 2, 2022

A family stands outside a house next to a “for sale” sign.

Homes are a unique type of investment. Not only can owners build equity and earn a profit when they sell, but they can also build a personal connection to the property.

This factor complicates one of the most common arguments among homeowners: should you sell your home or renovate any glaring issues to raise the value?

There are pros and cons to remodeling versus selling and buying a new home. Each situation is different, so homeowners will have to weigh these factors on their own and come up with the best option for their specific circumstances.

Currently, more people are deciding to renovate because of economic uncertainty and to build more equity while staying comfortable within their own homes. However, the real estate market is booming right now, making selling a more profitable option.

Here is a look at the facts you need to consider when deciding whether to buy or renovate.

Financial Considerations

First, homeowners need to consider the practical aspects of the selling versus. remodeling debate. Renovations often cost less, but you need to have more cash on hand or take on additional loans. If you sell, you need to consider the cost of a new house versus any remaining mortgage payments you have on the old one.

In short, the financial considerations are not as simple as seeing which of the two options is less expensive.


First, you need to get an estimate of the costs of each option. A renovation will take money out of your pocket now, but it could lead to equity later when you sell. If you have equity built up and the market is good, you can get money in your pocket when you sell. However, there are plenty of costs to consider before you list your home.

Here are some of the costs associated with selling.

  • Commissions: You will have to pay approximately 5% of the sale price to your real estate agent.
  • Pre-sale repairs: In many cases, you need to make some touch-ups to get your house ready for sale. These costs may be anything from a few hundred dollars for paint, to tens of thousands of dollars for major repairs.
  • Buying a new home: The largest factor is the cost of a new home. You will need to estimate the cost of the type of home you want and the monthly mortgage payments.
  • Moving costs: Moving can be quite expensive, especially if you are moving to another city or state.

Here are some of the costs associated with renovating.

  • Labor and materials: Unless you’re doing something very basic, you will most likely have to hire a contractor to handle your remodel. The remodeler will charge you for materials and labor.
  • Overage: Even the most tightly controlled renovation projects can go beyond the budget. There are hidden or unforeseen costs and disrupting events that can drive the price up. Whatever estimate your contractor gives you, you should have an additional 20% more on hand.
  • Permits: Depending on local regulations, you may have to pay for permits to do your renovation. For some major renovations, such as adding square footage to your home, permits may be difficult to obtain.
  • Alternate accommodation: If you don’t like living in a construction zone, you will have to factor in hotel costs for the duration of the renovation, or arrange to stay with family or friends until the job is complete.
  • Financing: If you borrow finances for the renovation, you will have to factor in the interest and the monthly payments on this loan.

After adding the costs, you can consider which option best fits your budget and your current financial situation.

Current Housing Market

It makes more sense to sell your home and move to a new one if you’re in a seller’s market. A seller’s market is when you can sell your home for a higher price because demand exceeds supply.

The flip side, of course, is that you will become a buyer in a seller’s market after selling your house. However, if you move to a different location with lower prices or purchase a smaller home, this factor may not have as big of an effect on your final decision.

Buying another house may also affect your mortgage rates and payments which you should also consider.

Home Equity

If you’ve lived in your home long enough and paid your mortgage faithfully, you’ve probably built up a significant amount of equity. You can estimate your home value by looking at recent sales of similar properties in your area.

Consider these sale prices when evaluating the timeline of your mortgage payoff. A profit from your sale will be the difference between these two figures.

On the other hand, renovations can also add equity, although you won’t see the return on these investments until you sell. If you have not built up much equity, renovating can help speed up the process. First-time homebuyers who have not been in their house for long can use renovations to build equity in this way.

Amount of Renovations Needed

In general, larger renovations are less likely to offer a positive ROI. According to the National Association of Realtors report, major renovation projects do not immediately pay for themselves. For example, the value added to a home after a kitchen renovation is 57% of the project’s average cost.

On the other hand, simpler repairs, including those you can do on your own, will not require as much of an investment.

If you want to change multiple rooms in your home, consider purchasing a home that already has those features.

Economic Growth

The economic growth of the area you’re living in should also factor into your decision to buy or sell. For example, if you live in a city with stagnant or declining economic activity, it is unlikely the price of your house will go up over time.

On the other hand, selling your home and moving to an area with higher economic growth will help build your home’s equity as it grows at a similar pace to the local economy.

One of the economic perks of living in a city or a suburban area, for example, is that they have better economic growth potential than in rural areas. According to the Pew Research Center, urban growth in the past two decades is double that of rural growth. Suburban economies, meanwhile, have tripled the growth rate of outstate regions.

Property Taxes

No matter where you move though, property taxes are an ongoing cost. If your neighborhood has high property taxes, the tax savings can offset the immediate costs of moving to a low property tax area. However, if you do not consider tax rates before purchasing your new home, you could be surprised by higher tax rates.

Personal Preference

The choice between renovating and selling your home isn’t purely financial. There are other factors to consider, such as your personal preferences and feelings about how you want your home to look and function.


Where you live matters a great deal, not just to your pocket, but to your mental health as well. There are a variety of factors within a location that impact your overall life satisfaction — from the actual integrity of your house, school districts, crime ratings, to even the weather.

If you like where you live, you may prefer to renovate or move nearby. At the same time, if there are things you would like to get away from in your current setting, a move to another location could be your best option.

If you are hoping to relocate, consider searching for an area that appeals to you more. If you want to move to the suburbs, for example, Southwest Austin is a family-friendly area known for offering a high quality of life to residents. You can also consider moving to a place like Lake Austin, with beautiful natural scenery and outdoor recreation spaces that offer health benefits.

If you are going to invest in relocating, consider all the possibilities and find a place that suits your preferences and has the amenities you want.


Renovation offers the chance to customize your home to fit your preferences in terms of functionality and looks. While this is a primary advantage of renovation, taking the upgrades too far can turn it into a negative.

Furthermore, you should consider if a remodel will fix what you dislike about your property. Noisy neighbors, crime problems, or traffic will not move away, no matter how much you improve your own home. If outside factors cause dissatisfaction with your home, moving could be a better option.

Amount of Work

Both selling and remodeling involve a lot of work. However, if you choose a good contractor or a solid real estate agent, the process will be easier and less time-consuming.

A good real estate agent can help you with staging your home for showings to potential buyers. While working with such a professional, you will often be able to live in your home normally until it sells. This will limit the disruption.

Consider Remodeling Then Selling

Remodeling versus selling doesn’t have to be an either-or issue. While an extensive remodel can produce a low ROI, the right balance can add value to your home.

Ultimately, if you like your current location and modest remodeling can provide you with your desired setting, a renovation will likely suit your needs.

About the Author

Last updated: 04/13/2023

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