Buy a Home with Good Resale Value
It can pay off big to look ahead and buy a home that other people will want to buy in the future. Most of today’s homebuyers will eventually sell their homes. Planning ahead can make that process easier.
by Lee Nelson
As you tour an array of homes in hopes of finding your dream house, you probably are more focused on making sure it has all the bells and whistles you want – such as hardwood floors, a big walk-in master shower, a private backyard and a quiet neighborhood. Those are your preferences, your wants and your needs.
But what about the next owner of your home? What will they want? Many buyers today are determining whether a home has a good resale value before they even take out a mortgage.
“It’s all in the eyes of the beholder, and the beholder is the market,” says Brian Koss, executive vice president of Mortgage Network, headquartered in Danvers, Mass. “You have to find a home that competes with the homes in the market, and you have to find a home that people want to have.”
How do you do that? Well, it all depends on where you want to live, how you want to live, and what type of people are living in the area such as families or singles.
“People want to be around people like them,” he says. “So, you have to pay attention to why you are attracted to a certain area to begin with. Is it a family area with good schools instead of an area full of bachelor pads?”
From the lending side, Koss says he looks to see if a home in a certain neighborhood has a comparable house that sold recently to find a comparable value. That can give you a sense of what things are selling for and not to buy one that too outside of that price tag.
“You don’t want to have the most expensive home in a neighborhood,” he says.
You can also ask your real estate agent to give you a report of comparable homes sold during a certain period in your price range in a certain radius.
When you do find a home that you want to buy but it needs some remodeling, it’s a good idea to talk with a Realtor about what are common materials used in that area. If you plan on selling it in five years or so, you don’t want to use things such as concrete counter tops if that is something very rarely seen in the neighborhood.
Koss explains, “A Realtor can really give you a sense of things about the area around you and tell you things like ‘no one does marble around here.’ The realtor can give you practical advice on what sells in the area and what doesn’t inside and outside a home.”
Speaking of the outside, curb appeal is just as important now as it has always been, Koss says.
“It’s how you dress that home up that makes all the difference in the world. Curb appeal is very important. And that’s why staging has become so popular even on the outside. Taking down bushes that have overgrown the house and planting flower can set the tone,” he says.
The photos and descriptions of houses online are what people are judging a house on before they ever decide to go see it. In fact, studies show people are keeping the Realtor at bay around eight months.
“They basically are telling Realtors that ‘I want to look at your listings, but I don’t want to talk to you yet,’ ” Koss says. “Buyers assemble their own ideas and data, and then they will give a Realtor a call to pick their brains.”
So, if you want good resale value, you have to find a home that shows well in photos. But it’s tough knowing what the housing market will do in the future since things have been a little crazy the past few years.
According to Redfin reports, prices over the past three years were up and down – depreciating in 2011, jumping by double digits in 2012, and raising an average of 14 percent in 2013. In June 2014, the median sales price grew at half that rate. Sometimes, it all depends on where you live and how big of an increase the median price is taking.
For instance, homes are selling for 20.3 percent more in West Palm Beach, Fla., 5.5 percent more in Seattle, and only .1 percent more in Orange County, Calif., compared to last year at this time.
Koss says that there are so many factors that play a part in how much a house will be worth in a few years besides how many bedrooms or how updated the kitchen is such as whether it’s close to public transportation or major routes, or whether it’s near water, trails, parks or shopping centers. It’s all about what people are looking for in a home in any particular area.
Lee Nelson writes for national and regional magazines, websites, and business journals. Her work has appeared in Yahoo! Homes and many Hearst publications such as Life@Home and Women@Work.