To Sell or Redevelop Your Home? Emotional and Financial Pros and Cons

Struggling to decide whether to sell or redevelop your home? Discover the emotional and financial pros and cons to make the best choice.

Representation of a townhouse development (created by AI)

Deciding to sell or redevelop your home is never easy. I still remember when my parents decided to downsize our family home, even though it was 20 years ago. I have a photo capturing the moment my sister and I handed back our keys wearing equally glum faces. My fondest memories of that house are mundane but tug at the heart strings. Like leaning on the kitchen bench chatting with mum while she cooked, or reading in a sunny spot with my dog, Charlie.

But my parents’ reasons for downsizing their home were good. They wanted to live on flat ground, in a low maintenance house within walking distance of some shops. I now live in a high-maintenance house on the side of a hill so I understand their feelings.

They’re not uncommon reasons for downsizing. A 2019 report by the Australian Housing and Urban Research Institute highlighted that around one-third of Australians aged 55+ want to move to smaller homes as they approach retirement. This housing market trend is largely driven by retirees seeking to free up capital or reduce maintenance costs. The report also found that a key challenge is the lack of housing that meets the needs and preferences of this group.

There are emotional and financial pros and cons that need to be considered when deciding whether to sell or redevelop your home. Flippable is building a service to make it easier to redevelop. Sign up for a free report on the duplex development potential of your land or contact us to get started.

This blog sets out some of the key considerations to help guide your thinking around downsizing your home.

Emotional considerations which deciding to sell or redevelop your home

• Letting go of memories: many homeowners have deep emotional connections to their homes. If they’ve lived there a long time, moving on can feel like letting go of memories, history, and identity. This is the case whether you sell to a new owner or developer, or redevelop yourself and then sell. Downsizing your home can be particularly hard if you need to reduce belongings to fit into a smaller home. I can’t imagine, down the track, selling the desk where my daughter will study or the trampoline where she plays, to get ready to sell and downsize our home.
• Defining your legacy: If you redevelop to remain on your land in a duplex or townhouse, or even if you redevelop to sell or rent, you can define how the property will be used for the next generation, thereby defining the legacy you leave. Many of the new duplex developments springing up across Sydney, for example, are stunning homes with modern layouts that focus on living life rather than mowing the lawn, and provide for bespoke needs like multigeneration living.
• Maintaining community: if you redevelop your home into duplexes or townhouses, you can live in one of the new dwellings and retain connections to community you may have built up over many years. This gives you the emotional benefit of staying in the place you love while still achieving financial goals. Rebuilding on the same land lets you keep the comfort and familiarity of home, with a modern, refreshed design. I don’t relish the idea of one day moving away from the things that give us connection: kindy, our swimming club, or the casual waterfront restaurant where, for years, we’ve enjoyed Friday night meat raffles and live music Sundays.
• Starting Afresh: On the other hand, selling can provide a fresh start. It can be liberating to move to a new area perhaps with other couples at a similar stage in life. We have family members who have done this when downsizing their home, and they love the new community they have built with other retirees who have done the same thing.
• Emotional Toll: Selling the family home can be stressful but redeveloping that home can be doubly so. There’s the upheaval of finding temporary accommodation, delays and potential cost blowouts, and the challenge of managing the process. Property development can feel like an exciting adventure but it can also be overwhelming, particularly if you’re doing it for the first time and don’t know where to start.

Financial pros and cons of selling or redeveloping your home

• Immediate returns: If you sell to a new owner occupier, you can immediately receive the proceeds and get on with your life. Comparable sales in your area will give you an idea of what you can receive. This option can provide a relatively quick lump sum that can be reinvested into a smaller home, or used for travel, healthcare, or other life goals. However, current market conditions and housing market trends can impact whether you sell now or wait for a better time in the cycle.
• Returns with a development premium: If your land is developable, you can receive more for your land if you sell to a developer who will build new housing like a duplex development, dual occupancy or townhouses. Whether your land is suitable for property development depends on multiple, often convoluted council and State Government rules which your real estate agent may or may not know about. There are multiple avenues to sell to a developer but to get a good deal, you need to understand what the developer stands to make and the share you can reasonably earn without stopping the development proceeding.
• Delayed but better returns: you can develop yourself to sell, live in or rent out. The value can far exceed the sale price of your current home as developers aim to earn a 15-20% (or bigger) margin. While property development has a reputation for being costly and risky, there are benefits to doing it yourself. For example, you can avoid some costs that normally get factored into the developer’s feasibility, and you can also minimise risks like planning approval risk (because you don’t need to incur land acquisition costs before seeking approvals) and construction cost and program risks by using prefabricated housing.
• Upfront costs of redevelopment: The costs of property development are substantial. There are consultant and legal fees, costs of obtaining planning consents, build costs, financing costs and tax. Some of these costs can be shared with investors if you know where to look.

Key questions to ask before selling or redeveloping your home

Before you choose the path you want to follow when downsizing your home, ask yourself the following questions:

• Do you want to stay in your home or your community, or are you ready for a new environment?
• What are your financial goals? Do you need immediate cash, or do you want to build long-term wealth?
• How much time, energy, and capital are you willing to invest in redeveloping your property?
• What is your emotional attachment to your home, and how much are you willing to change it? And how much do you want to define the legacy you leave?
• Are you prepared to deal with the stress of property development, or would you prefer a simpler solution?

Both options offer different kinds of rewards and challenges. The right choice when you’re deciding whether to sell or redevelop your home depends on your personal circumstances, financial goals, and emotional readiness.

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