Focusing on resale potential before you buy a property is a little like considering the terms of the divorce settlement before consummating a marriage. Yet, this is precisely what savvy real estate investors do. They plan out their exit strategy before they negotiate a purchase. Home buyers who give consideration to resale potential before they buy can reduce their chances of losing money when they sell.
Location is often touted as the prime value indicator for real estate. This is because properties in the best locations appreciate more during good real estate markets and hold their value better during down markets. The community in which you buy will have an effect on your resale potential, as will market conditions at the time you sell.
There’s usually higher demand for properties that are located in areas where the public schools are good. Because of the demand, these communities tend to be the most expensive. When faced with the alternative of costly private schools, many prospective buyers would rather pay for a more expensive home where they can send their children to the public schools.
Buying in a community that’s on the upswing can result in a big payoff when you sell. These communities are usually located adjacent to more affluent communities that are beyond the price range of most buyers. Look for communities that are close to public transportation, and within a reasonable commute distance of a major metropolitan area.
Location within a community can also affect a property’s resale potential. Usually, homes that are on busy streets, or next to freeways, will sell for less than similar homes that are located on quiet side streets. Being located across the street from a school, which can be noisy, may also result in a discounted price.
Buyers pay more for homes that offer easy access into the main living area. An entry that is level in from the street is ideal. A garage that opens directly into the kitchen area is also desirable. On the other hand, homes that are located up or down a lot of stairs are a hassle for most buyers. An inconvenient access can have an adverse effect on value.
If you buy a home that has an incurable defect, like a busy location or too many stairs, make sure that you don’t overpay. There’s nothing you can do to remedy an incurable defect. It can also negatively impact the price when you decide to sell.
The best time to sell a home that has an incurable defect is when the market is strong and the inventory of homes for sale is low. This is when buyers are willing to make compromises for the sake of being able to buy at all.
In a slow, buyer’s market, where there are plenty of homes for sale, buyers will take their time. They can afford to be choosy. You’ll have to discount your price more in a buyer’s market in order to look attractive relative to the competition.
It’s a good idea before you buy a home to check the permit history on the property. Make sure that you’re not paying a premium for remodeling that was done without necessary building permits. In some communities, homeowners are penalized if the building department becomes aware of work done without permits. You could incur extra expenses that you hadn’t anticipated.
THE CLOSING: Deferred maintenance usually results in a lower sale price. Your best protection is to keep your home well maintained.
Dian Hymer is author of “House Hunting, The Take-Along Workbook for Home Buyers,” and “Starting Out, The Complete Home Buyer’s Guide,” Chronicle Books. Copyright 2003 Dian Hymer
Distributed by Inman News Features