The criteria for remodeling are not complicated. If MOST of the house is perfectly wonderful; remodel. If the house has architectural merit; remodel. If the house enjoys setbacks or heights that are not achievable today; remodel. The converse is equally true; if one or all of these things do not exist you should consider the cost difference between remodel vs new construction.
Too often homeowners think they will save money by remodeling but if a large percentage of the house is affected, including the kitchen and bathrooms it’s probably more expensive to remodel. Often owners fail to consider the cost of renting a home for 6 months to a year during construction, cost to repair and upgrade electrical and plumbing throughout the house (regardless of whether or not you intended to) as required by city codes, as well as cost of replacing hidden portions of the house discovered to have dry rot or termite damage. If your home is older than 1980 you probably have single paned windows which should be changed out for dual glazed which will and reduce your energy consumption (rebates may be available). If your plan is to add a 2nd story and your home is older than 1970 you can expect to have structural challenges that also add to the total cost (watch for next blog about new Energy –Title 24-building code requirements).
Another misconception owners often have is thinking that their property taxes will be less if they remodel than if they tear down. This may not be the case. If your remodel affects more than 50% of your existing structure the assessor may consider your home to be ‘new.’ The assessor will evaluate your reported construction costs and new square footage and compare it to comparable homes in your area. It’s a good idea to call your accountant and ask these questions.