Can you afford not to extend?
Moving might make sense to begin with, even if you consider the hassle of the search, the buying and selling process and all the packing and unpacking. That is until you start to add the cost of it all up. Plus of course, no one likes handing over tens of thousands of dollars to the government in stamp duty.
In fact, as an example, if your home is worth $650,000 then it could cost you over $83,750* just to move. That’s an incredible amount of money.
Below is a guideline of the costs involved*:
|1||Real Estate agents fees to sell existing home, say, 2% on $650,000.00||$13,000.00|
|2||Advertising existing home for sale||$12,000.00|
|3||Furniture hire during sale (more if property passed in and stays on the market)||$4,000.00|
|4||Cleaning, maintenance, updating and getting ready for sale||$5,000.00|
|5||Storage fees during sale||$5,000.00|
|6||Conveyancing fees and disbursements/searches||$1,500.00|
|9||Stamp duty on, say, $700,000.00||$38,000.00 (Victorian|
stamp duty calculator)
|12||The cost of bridging finance if you buy first and can’t sell||Thousands|
|13||The cost of renting if you sell your home and can’t find a new one||Thousands|
|Total cost of moving||$83,750.00 plus|
By extending rather than moving, you will have an additional amount of AT LEAST $83,750.00 that you can spend on your new, tailor designed and built extension.
There are other non-financial headaches associated in moving to a new home:
- Disappointment in leaving your home, garden, neighbourhood, friends, local amenities and conveniences and schools.
- Do you buy or sell first? If you buy first you risk not selling and incurring the financial burden of bridging finance which can run to thousands of dollars. If you sell first, you may find yourself spending thousands of dollars renting accommodation whilst waiting for the right property to come along.
- The enormous amount of time and effort involved in preparing your home for sale and making it ready for 2-3 open for inspections per week during the sale process.
- Packing and moving the entire contents of the home including time off from work and the long hours required to get everything done.
- Finding the time and motivation to house hunt every Saturday.
- Finding the right property at the right price.
- The disappointment of missing out at auction and the waste of time in pursuing properties where values are underquoted by selling agents.
- The inconvenience and time to terminate existing power and utilities to your current home and arranging connections to the new home.
- Buying a property that will inevitably need some level of renovation to suit your needs instead of extending the existing one with a design that is specifically tailored to your requirements.
*The costs of buying and selling set out above are an estimate based on a selling price of $650,000.00 and a purchase price of the new home of $700,000.00