Building a Home Addition versus Buying a Larger Home

The Advantages of Building a Home Addition

By Mark J. Donovan




Do you have a growing family and does the home you bought just a few years ago now seem a little crowded? If so you’re probably thinking about buying a larger home. Before you put the for-sale sign up in your yard, pause and think about what you already have. For many homeowners who have found themselves in a similar situation they’ve discovered that building a home addition onto their existing home is a better choice than selling their home and buying a larger one. Why? Because they like the home and neighborhood they live in. They don’t want to move their children to a new school district.

The thought of selling and moving to a new home is more effort and pain than they are willing to deal with. The list goes on.

So if you enjoy the home that you have presently, you may want to think more about building a home addition onto it before going further down the path of buying a larger home.

Besides all of the issues just mentioned, building a home addition often makes a lot of financial sense too. In addition to providing the additional living space your family is in need of, a home addition typically costs much less than selling your existing home and buying a new one. Keep in mind that when you sell a home you need to account for sales commissions on the sale of your existing home, moving expenses, real estate transfer taxes, and utility cancellation and hook up fees. Summed together these costs can represent a very large price tag, and often much more than the cost of building a home addition.



When considering building a home addition there are a number of key issues that you need to consider during the early planning stages. These issues include what type of additional living space do you need and how larger of a home addition will be required. More specifically what do you anticipate the size and square feet of the home addition to be?

Another important issue to think about is what will your neighborhood real estate market value support?

For example, if you live in a neighborhood with smaller starter homes and you are considering building a home addition that will nearly double the size of your existing home, chances are you’ll have a tough time recouping the cost of the addition when you eventually sell the home someday.

Home Addition Bid Sheets

Other important factors that you’ll also need to consider when contemplating building a home addition is how you will finance it, how will you have it architected and built, and your timeline for getting it done. Lastly, you’ll also need to think about how your family will deal with the disruption while your home addition is built.

To dive a little deeper into the question of architecting your home addition make sure again to know what you want to get out of the home addition. For example, are you looking for a master bedroom addition with an ensuite? Or, are you looking for a larger kitchen or family room. Also, figure how large you want the space(s) to be.

After you’ve determined what type of space you want to create in your home addition, and have an estimate on the desired amount of square footage, you can then theoretically compare your future larger home size and features to comparable homes that are presently on the real estate market.

Similarly, you should compare your home’s current size and features with current real estate market conditions. Note that this analysis is an important step in deciding whether or not building a home addition, versus buying a larger home, makes financial sense. By doing this market analysis you can see if the money that you will invest in your proposed new home addition makes economic sense. It also helps to determine the construction budget for your home addition. For example, if the value of your home increases by $50K after building the home addition, then your home addition costs should not exceed this number if you want to ensure a positive rate of return on your investment. building a room addition

The other major issue to delve into a little deeper is how you will finance building your home addition. If you plan to pay cash for your home addition then you’re all set.

However, if you are like most people you’ll need to get a loan. You basically have two paths when it comes to getting a bank loan. You can either get a home equity loan to finance the construction of the home addition, or refinance your entire home with additional funds raised for building the home addition. If mortgage rates are high when you plan to start the home addition construction, then getting a home equity loan makes the most sense. If, on the other hand mortgages rates are low compared to your existing mortgage, then it may be a good time to refinance the mortgage on your home and raise the extra funds for the home addition.

With a better understanding of what you want for a home addition, a target budget, and a finance plan, you can now focus on the actual home addition design. You may want to employ an architect for this effort. Alternatively you can buy a home design software package and make up your own home addition design plans. Today’s home design software packages allow you to draw 3D views of your building project, change a plethora of features with the click of a button, and produce the various drawings and building material lists for costing out your home addition and enabling you to pull building permits.

Whatever path you go keep in mind that the home addition design should be such that it melds functionally and aesthetically well with the exiting home, both exterior wise and interior wise. The last thing you want is to create something that looks like a giant albatross attached to the exterior of your main home. Curb appeal plays a major factor in setting the market price for your home. So make sure your home addition will look like it was part of the original home design plan.

When designing your home addition also make sure to carefully consider, elevations, house siding, doors and windows, and rooflines. All should be designed such that they meld seamlessly into the existing house.


Another major issue to think about is your timeline for completing the building project, and how much sweat equity you plan to put into it. If you have never done home construction or remodeling don’t count on yourself being a major contributor in the building process. If you do, you may find yourself never completing the project or producing something that you won’t be happy with. Hire qualified and licensed contractors where you lack the skills and time to do the work correctly and in a timely manner. For smaller tasks, such as painting, finished trim-work installation, etc. feel free to tackle these items if you have the time, tools and energy. You can save a few dollars by doing so.

Also, when developing a timeline for the construction, make sure to factor in contingency time for weather and for material delivery issues. For example, if you kick off your home addition during the winter and spring, know in advance that there will be days when contractors won’t be able to work. Also, cabinets and special door and window orders can often take longer to arrive on the jobsite than what was promised. So allow time in your building schedule for these types of events. By doing so you’ll be much less upset when these types of issues come up.

It is important to keep in mind that building a home addition is a major construction project. Thus it will be disruptive to your home and family for a number of weeks. With proper planning you can mitigate some of the disruptions and hassles, but inevitably you’ll need to be prepared to accept a few minor inconveniences. Also expect some extra dirt and dust around the home during the construction as it is inevitable when building a home addition.

Lastly, make sure to hire well vetted contractors. For most homeowners that choose to build a home addition, they find hiring a general contractor to oversee the entire project and to hire and manage the sub-contractors a better solution. This way they only have to deal with one contractor when it comes to scheduling and making payments.

If after weighing all of these items carefully and determining that it indeed makes sense to build a home addition, rather than buying a larger home, then start developing your building plans and interviewing contractors. When your new home addition is complete, you should ideally have the new living space you desire, made a smart financial investment, and maintained your family’s roots.

For more help on building a home addition, see HomeAdditionPlus.com’s Room Addition Bid Sheet. The Room Addition Bid Sheet provides you with the knowledge on how to plan a home addition project, and what to look for when hiring contractors for your new home construction. It also includes a detailed cost breakdown table and spreadsheet for estimating your own new home addition building costs.


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