How Important Is Re-sale Value?
When buying a house, you are looking for a place to call home. But because a home is an investment, you must take its future resale value into careful consideration. Will you get a return on that investment should you decide to sell? If you are in a situation that might require you to relocate in the future, or you plan on selling anyway because you want to upgrade to a larger house or another area, you should consider the following items that may factor in the resale value of the home you buy.
Location, Location, Location: What makes a location good? Does a quality location guarantee a strong future price appreciation and make reselling quick and profitable? There are at least five factors that influence the overall rating of a neighborhood, so you should carefully check out each when you consider making a purchase.
Neighborhood Appearance: Are all homes well-painted with nice landscaping? Do you see any graffiti? Most people just want to live in a neighborhood that looks clean and safe.
Quality of Schools: Studies have shown that homes in excellent school districts show the fastest and largest price appreciation. You can check the quality of schools by going to the local school district and asking to see standardized test scores. Some states (such as California) rank schools and the higher the scores, the better and more attractive the schools are.
Crime Rate: Crime may be dropping in many metropolitan areas, but you should still pay close attention to the stats in your area.
Access: Is the neighborhood tucked away and/or hard to find? Does the house sit on a busy street? Safe and easy access to the neighborhood and the property can play a key role in the future resale value of a home.
Shopping: Convenience is what you are looking for. The locations of grocery stores and businesses you’ll frequent, in close proximity to your neighborhood, are attractive incentives. On the other hand, a home right next door to a busy shopping center, a toxic dumpsite, or a noisy freeway is going to be harder to sell.
And then there is the obvious—a home right next to a busy shopping center, a toxic dump site, or a noisy freeway, is going to be harder to sell.
Lot and Landscaping: Even though most real estate value is usually concentrated on the actual home, the land is also important. Over-landscaped property is not a smart purchase; you would normally pay a premium for it, which you may not be able to recover when you sell. You will get the best value if the house is moderately landscaped or under-landscaped for the area. You can always improve the landscaping during your ownership by improving the grass and adding bushes and trees, but you do not want to spend too much during the sale.
House Size: Houses’ size and number of rooms vary slightly throughout each residential neighborhood, but they should not be too different. If resale value is important to you, try to avoid buying the largest home in the neighborhood. When determining market value, the homes next door to yours are most important. If most of the nearby houses are smaller than your house, they can drag down appreciation.
On the other hand, if you buy a small- or medium-sized house, the neighborhood’s larger homes can help pull up your value. This is a time when determining your 'wants' versus your 'needs' can be extremely important; buying what you need in a more prestigious neighborhood could provide more financial reward than getting what you want in a less desirable neighborhood.
Bedrooms and Bathrooms: Three- and four-bedroom houses are the most popular among home buyers, so if you can stick in that range you will have more potential buyers when it comes time to reselling. Five is okay, too, as long as the additional bedroom doesn’t add a significant cost. A nice house should also have at least two bathrooms, and preferably at least two and a half. One bathroom for day-to-day visitors, one for the master bedroom, and at least one to be shared by the other bedrooms.
Closets: Master bedrooms’ large walk-in closets are highly sought-after. Closets throughout the rest of the house aren’t as important; but the home should have plenty of storage space for clothing, towels, and linens.
Garages: Garages add to the resale value. Aim for at least a two-car garage, but keep an eye out for the recently popular three-car garages.
The Kitchen: Family activity centers around the kitchen, so this is the most important room of the house. Larger kitchens sell better, as do those with modern appliances. The dining room and breakfast nook should be adjacent to the kitchen and in newer houses, so should the family room. For outdoor entertaining, easy access from the kitchen to the backyard is convenient. Also, the distance between the garage and kitchen should be short for the ease of chores like hauling groceries in from the car.
Swimming Pools: Swimming pools no longer add the value they once did. Safety issues for families with younger children are more publicized now than in the past, so those families tend to avoid homes with pools. As a result, having a pool could actually reduce the number of potential home buyers when you try to resell. So if you choose to buy a home with a pool, do it for your own enjoyment instead of as an investment.