Renovate or Sell? The Pandemic Is Complicating the Math for Homeowners

Photo to accompany story about whether you should remodel or move. Getty Images

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The pandemic has made us all very familiar with our own four walls — perhaps too familiar.

“People are looking around their homes and they’re asking themselves, is my home meeting my needs right now in my new normal?” says Amanda Pendelton, home trends expert at Zillow. 

For those whose answer is no, there are usually two options: remodel or sell. Both options have costs associated, but renovations might be even more expensive right now than usual.

With everyone living at home, “demand has gone through the roof,” says Doug King, president of the National Association of the Remodeling Industry. That, combined with a few hurricanes this year that have disrupted supply chains, has “created a perfect storm of low supply and high demand.” 


Here are some key questions to ask if you find yourself considering whether to sell or remodel.

What’s Driving You to Move?

Most homeowners have at least one thing they wish was different about their home, Pendleton says. 

“For some homeowners, the fatal flaw exists outside the four walls. Like if your house backs up to a creek and it floods when it rains, or you live on a busy street and there’s a lot of traffic noise,” Pendleton says. “Those are good reasons to sell and move.” 

Some may be influenced by flexible remote work options. With office proximity no longer a priority for many, “you may consider moving closer to friends or family, instead,” Pendleton says. 

But if the flaw is within your home’s four walls, can be fixed within your renovation budget, and will allow you to live in your home for longer, then that’s when you should consider a renovation.

Still, sometimes an internal problem cannot be fixed within a reasonable renovation budget. 

“You’ve got people working from home and now people are wanting to dedicate part of their home as an office, which might include a room addition,” King says. 

A structural renovation, like adding a room, can be a costly project. But if you have the means and your renovation is a long-term strategy that can make your home “more functional, more livable, or more enjoyable for your family for the next five to 10 years, do it,” Pendleton says. 

What’s Your Budget?

Both selling and renovating can come with costs that may not be obvious at first glance.

Costs of Renovating 

A cost of remodeling that a lot of people don’t think about is the financing cost. 

There are several different loans you can take out to pay for a renovation, such as a home equity line of credit (HELOC), a home equity loan, or even a personal loan. Make sure you take into account the interest and cost of repaying that loan. For example, if you take out a $10,000 5-year personal loan with a 12% interest rate, you’re going to pay an additional $3,346.67 in interest. 

Part of your project cost estimation should also include a 20% pad for “all the things that could go wrong,” says Pendleton. “Give yourself a pad in case you open up the walls and there’s some funky things behind them.”

Other costs to consider are local permitting costs, which are usually a percentage of a project’s value. If you’re doing a serious remodel and you have to leave your house, then consider the costs for wherever you’re going to stay in the meantime.

Costs of Selling

The average homeowner spends $18,342 in extra or hidden costs associated with selling their home, according to a 2018 Zillow analysis. The biggest of these costs are real estate agent commissions and transfer taxes, which for a median-valued U.S. home, can clock in at over $13,000.

In many cases, people don’t “account for the real costs of repairs that their home likely needs before selling. It all adds up,” says Pendleton. 

Sellers who hire professional help for repairs and staging typically spend about $5,000 on average to cover the basics: painting, staging, carpet cleaning, law care, and moving costs, according to Pendleton. 

“I would say that if you’re spending more than $30,000 to get your house ready to sell that may be where you say this is too much,” King says. 

Should You Renovate Before You Move?

In general, when you’re selling a house you can either sell as is or make upgrades to try and sell for a higher price.

“The first thing you should do is talk to your agent and ask them whether you’re better off selling the property as is or making improvements,” says Rachel Stults, consumer and lifestyle expert at Realtor.com.

Pro Tip

When deciding to renovate before selling, look at prices of similar homes in your neighborhood that have been renovated recently and see what the asking price is, and how different it is from what you could get for your home as is.

When considering renovating to sell, you shouldn’t do more than “a light remodel,” King says. “If you haven’t updated your kitchen or your bathroom and you’re looking to sell,  you waited too late.”

A light remodel should only include cosmetic updates. Things like new countertops, paint, hardware, cabinetry, or lights can make a big difference relative to the lower cost that comes with more intensive projects. 

It’s also important to consider your return on investment when making this decision. 

“Typically the kitchen and bathroom have been the most popular spaces with the best return on investment,” Stults says. “But before you take a sledgehammer to your home think about the most important things you want to do and then price it out.”