Move or improve? Ask these questions

Most families eventually grow out of their first homes as they add more members or their children get bigger, or perhaps they add a business or more cars. It’s at that point that they need to decide whether to sell their house and buy a bigger one, or if they should remodel and perhaps add on to their existing home.

Bradley Tuttle of Real Estate Loans 4 You offers these four questions to determine whether you should improve your current home or buy another. He advises that homeowners who are happy with their current neighborhood and school district (usually the top two owners' priorities) are wise to weigh answers to the following:

1. How long do you intend to keep the house?

It doesn’t make much sense – financial or otherwise – to pour money into a house only to sell it. If you've ever lived around and through a remodeling project before, you’ll want to get enough joy out of the improvements to offset the emotional upheaval wrought by the construction.

2. Will you be able to recoup the cost of improvements when you sell?

Even if you aren't thinking of moving in the near future, be sure to do the math before wading knee-deep into a project. A real estate agent or appraiser can show you comparable properties (comps) of recent sales to determine how much, if any, the improvements will increase market value. If you make improvements that don't add to market value, be prepared to walk away from what you've spent, especially if selling in a short period of time (less than five years on the average, depending on the type of improvement.)

3. Are the improvements you're considering logical given the age, size, and location of the house?

Just as you wouldn't install a new sunroof on a dilapidated car, don’t make expensive additions to a house littered with obsolete functions and features. Appraisers would tell you that it's much tougher to recoup the investment from home improvements if they aren't similar in style and design/era to the existing home.

4. Could additions/changes over-improve the house?

A house at the top of the market for the neighborhood can take longer to sell since buyers often purchase on the low side, hoping to maximize equity and improvements made over time. And certain buyer segments don’t welcome some additions, such as families with young children are likely to shy away from home with a swimming pool, since it's the No. 1 cause of death for children under age 5. And retirees will not want a master suite in a third-floor loft, even if it has been remodeled.

Even though you may want to make additions/changes based on your immediate needs and desires, it never hurts to consider a potential, future buyer to avoid over-improvements you can't recoup.

The answers to these four questions may not provide all the information you need to adequately weigh improving the house versus moving to another, but they will serve as talking points to get you focused on solving your housing needs in an organized and cost-effective manner.