Renovate or Move? How to Decide When You've Outgrown Your New Jersey Home

Renovate when your house can become what you need for less than it costs to move, the lot and the town's rules allow it, and you'd still want to live there years from now. Move when the fix is bigger than the house, the location no longer works, or the money goes further on a home that already has the space. The way to know is to price both paths side by side before you call an architect or a mover.

I'm Dennis Mark Interdonato with The Dennis Mark Group. Before I sold real estate, I was a New Jersey home builder and residential remodeler, so I've stood on both sides of this question. Across Monmouth and Ocean County, I walk homeowners through it with real numbers, and some of them end up not moving at all. That's a fine outcome.

What does moving really cost?

More than the price difference between the two houses. On the selling side there's the mortgage payoff, your attorney, the fees set in your listing agreement, and New Jersey's realty transfer fee, which the seller pays at closing (NJ Division of Taxation). On the buying side there are closing costs, the move itself, and whatever the next house needs. A bigger house usually carries a bigger property tax bill, too. The buyer side is broken down in what it costs to buy a home in New Jersey.

Then there's the part that doesn't show up on a closing statement: a new commute, a new street, and the time it takes to find the right house.

What does adding on really involve?

• Permits. New Jersey's Uniform Construction Code makes it unlawful to construct, enlarge, repair, renovate or alter a structure without first applying to the construction official and getting the required permit. Ordinary maintenance and certain minor work are the exceptions (N.J.A.C. 5:23-2.14). An addition, a finished basement with new rooms, or a second story is not ordinary maintenance.
• Zoning. Setbacks, height and how much of the lot you can cover are set by your town. If the plan doesn't fit, a variance is a separate approval with its own timeline. Find out before you pay for drawings.
• Property taxes. New Jersey's added assessment law taxes additions and improvements once they're completed during the year, instead of waiting for the next regular assessment date, and assessors watch building permits for new value (NJ Division of Taxation, Assessor's Handbook). Budget for the higher bill.
• Living through it. Dust, noise, a kitchen out of service and a schedule that depends on inspections and deliveries. Some projects mean moving out for part of the work.

How does a former builder decide whether a house can grow?

When I walk a house for this question, I'm looking at five things:

1. The bones. Foundation, framing, roof and mechanicals. Adding a second story onto a house that can't carry it is a different project than the one you priced.
2. The layout. Can the new space connect to the old without a hallway to nowhere? Bad flow is hard to sell later.
3. The lot. Room to build within the setbacks, and where the yard goes after you do.
4. The street. The price range of the homes around yours. If the finished house would be far above it, you may not get the money back when you sell.
5. The timeline. If you need the space in three months, a project that takes a year doesn't solve the problem.

I'll tell you what I see, and I got a guy for everything, so if you want a contractor's estimate to compare against the cost of moving, we can get one.

When does moving usually win?

• The space you need is more than the lot or the zoning will allow.
• The house needs major systems work on top of the addition.
• The location stopped working: the commute, the drive to the people you see most, the train.
• Your equity plus your budget buys a home that already has what you need, without the construction risk.

When does renovating usually win?

• You love the location and the house has good bones.
• The project is permitted, fits the lot, and keeps the house in line with the street.
• Your current mortgage rate and property taxes are hard to replace.
• The added space is something future buyers will want too.

What if you move but the house needs work first?

Then you get two plans: sell as-is, or make a few strategic updates first, with what each one should bring. A Beachwood seller of mine put under $15,000 into updates I picked and supervised and the sale brought $75,000 more in total. Not every house works that way, which is why you see both plans before you spend a dollar.

Frequently Asked Questions

Is it cheaper to build an addition or buy a bigger house?

It depends on the house, the lot and what's for sale near you. Price the addition with a real contractor estimate and permits, price the move with a home value and both sides' costs, and compare them on one page.

Do I need a permit to finish a basement in New Jersey?

New Jersey's construction code requires a permit to renovate or alter a structure unless the work is ordinary maintenance or qualifying minor work. Finishing a basement into living space generally isn't maintenance, so check with your town's construction office first.

Will an addition raise my property taxes?

Usually, yes. New Jersey's added assessment law lets the assessor tax completed additions and improvements during the year they're finished. Ask your town's tax assessor how it applies to your project.

Can an addition hurt my resale value?

It can if it's poorly connected to the rest of the house or pushes the home far above the homes around it. I'll give you my read before you build.

This is general information, not legal, tax or lending advice. Your town's construction and zoning officials, your contractor and your tax assessor have the final word on any project.

About the author

Dennis Mark Interdonato is a REALTOR® and Master CDRE® who leads The Dennis Mark Group at Keller Williams Realty Ocean Living in Point Pleasant, NJ, helping buyers and sellers throughout New Jersey make their next move, with Monmouth and Ocean County as home base. Read more about Dennis Mark.

Keep reading

• How Dennis Mark plans a move around a life event
• Plan it step by step with the free Life Events Guide.
• See what your current home would bring with a free home value.
• Staying and improving? Read which upgrades add value in New Jersey.
• Moving up instead? Read selling your home and buying a new one.
• Have a question this didn't answer? Send it to Dennis Mark and it may become the next article.