Should I Stay Or Should I Go?

Ah, January.  A time here in Victoria, and on the south island, where people examine the things that didn’t work about their home over the holidays.  Relatives sleeping on an inflatable bed, kitchen counters smaller than a turkey and a ham, bad floor plans making the house feel microscopic, bathrooms with no shower (or tub), too cold or too hot, foggy windows, drafty doors, bad lighting.

“Honey, I was embarrassed about this old house when all our mooching relatives showed up.  Let’s sell it and get a better one!”

Seems pretty reasonable, the old barn can be sold to some other sucker, let them fix it up.  Why waste all that money on renovations when we can buy another with all of the work already done?

Renovations are not cheap, ever.  But they are 100% under your control (countertops can be laminate, stone, not done at all), and they can always be done in phases.  Switching houses is pretty cheap, and none of the construction mess.  It is cheap, right?

There is an old poker saying, “If you have been playing for half an hour, and do not know who the patsy is, you are the patsy.”  Let’s take a bit of a look at what it costs to switch a house (and assume the sales and purchase price is the same, which I bet it will not be), and make sure that you are not the patsy.

  1. Real estate fees.  These are usually 6% on the first $100,000 and 3% on the balance.  Plus GST.  An $800,000 house in Fairfield costs $27,000 plus tax for the agent to unload for you.
  2. Sales preparation costs.  Hey, wait a minute, the realtor wants us to spend some dough on the barn to make it more “appealing” to buyers.  Clean out the garage?  I was going to do that when we moved. There is a ton of great stuff in there, bet they’ll be happy to get all that thrown in as a bonus!  Paint?  Let them paint it in colours that they want, painting is expensive.  Repairs?  Hey, we are unloading this place so that we don’t have to do any of that.
  3. Property Transfer Tax, which can be $14,000 on that $800,000 Fairfield house that you buy.
  4. Banking and mortgage fees.
  5. Get a lawyer.  They are champs at the paperwork.
  6. Packing.  Now, even if you put no value on your time, this probably is more than a Saturday afternoon.  You have to find boxes, tape, friends who will work for cheap pizza.
  7. Maybe rent a big box to move all of your treasure, I have used UPak personally.
  8. Unpacking.  Probably alone because you bought your friends cheap pizza.

I will also bet that you will do some renovating to the new chateau after you move in (it is cheaper to renovate before you move in, but it is your choice).  Paint a bit, fix this and that, redo the bathroom.  Does the furniture work in your new space?

I have been a bit tongue in cheek so far, but I find that people often talk about selling rather than renovating and they do not count the dollar costs, some of which are listed above, nor the so called soft costs.  You know your current neighbors, and neighborhood, and probably like it there.  The commute to work is a known entity, you know how much time it takes now.  The 13 municipalities that make up our fair city are constantly changing roads and transit, heck, Victoria is constantly adding bike lanes (have to appease the 5% who ride bikes), lowering speed limits, creating transit only lanes, and replacing bridges.  You could find the new commute takes a lot of time out of your life.

So maybe it would be a useful exercise to get an estimate or two on fixing up the old barn into your new chateau, and compare that number to the dollar cost of changing houses plus the intangible values of living where you do now.  Only you and your family can answer that age old question, should I stay or should I go?


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