BUYER’S ARTICLES – FOR THE SMART CONSUMER
When you decide that it is time to buy a home, there are dozens of things that you will need to take into consideration before you even start shopping around. You need to know how much you can comfortably afford, and how much your lender is willing to let you borrow toward the purchase of a home. You also need to know how much of a down payment you can have on hand when you find the home you would like to purchase. Furthermore, you need to make sure that you are ready and willing to take on the many responsibilities of home ownership.
In addition, you will need to assess your needs and wants and decide what is most important in the home that you’re purchasing. You will need to consider the location where you want to live and investigate the schools and community offerings. There are just so many things to consider!
Fortunately, one thing that you should never have to consider is whether or not your home will have a high resale value. Today’s home owners are not the same as the people who owned homes twenty or fifty years ago. Gone are the days when newly married couples purchased family homes that would remain in the family for many generations. Now that careers and family responsibilities are making families more transient, a large number of home buyers are purchasing a home only temporarily. Therefore, a great resale value is one of the key attributes that these home buyers are seeking.
So, how do you determine whether a home has a resale value that will allow you to earn a moderate profit after living in a home for a relatively short period of time? If you assume an 80% mortgage and live in the home for only 5 of 30 years in the mortgage period, you will need to be able to satisfy your mortgage from the sale proceeds. Anything remaining is considered to be the profit. Making a profit after satisfying your mortgage is the ideal situation when you plan to upgrade to a more expensive home – or to any other home, for that matter.
Sometimes moves are not planned, as an out-of-state career change or some other event necessitates moving earlier than originally planned. In that case, it is good to have thought about a home’s resale value before the purchase was finalized.
Resale Considerations to Make BEFORE You Buy!Size
Size means different things to different people, and the ideal home size for a given area depends on the square footage of comparable homes in the local area. In some locations, a 5,000-square-foot home is ideal, while in other areas a 2,500-square-foot is considered to be large.
Some people assume that the largest home on the street will have the highest resale value, but that is not necessarily the case, given that the people who look for homes based upon location often want to have a home that is similar in size and style to all of the other standard homes in that area.
Here is another reason that buying the largest home in the neighborhood is not necessarily the way to guarantee high future value. When you own the largest home on a street of relatively small homes, those smaller homes will most likely appreciate in value more slowly than if all the homes had medium or large square footage. If your home is nestled in that neighborhood, even though it is larger, you will also be subject to that slower rate of appreciation. Therefore, considering the return on investment, it would actually have been more beneficial to have purchased a less expensive and smaller home in the same neighborhood.
Consider the reverse situation, this time assuming that you are purchasing the smallest home in an area of large homes. The large homes will be worth more and the value of those homes will appreciate at a faster rate.
Lot Size and Landscaping
A level lot that is relatively square carries a higher value than does an odd-shaped lot that is only slightly larger than the footprint of the home sitting on it. The placement of the home on the lot is not critical in most cases, but if a home seems oddly situated in comparison with others in the area, buyers may be less interested and, consequently, pay significantly less than they otherwise would. Try to find a home with a traditional street orientation on a normally shaped lot for the highest potential resale value.
Also, the useable space in the yard is something that will make a difference to most buyers. A backyard swimming pool or play area is great when space allows, but if all the grass on your lawn comprises an area smaller than that of your kitchen, you probably will not find many buyers who are enthralled with your backyard.
Number of Bedrooms
In the past, three-bedroom homes were the most sought after. However, today’s families almost always want to purchase of a home with more bedrooms than occupants. A fourth or fifth bedroom can make a very nice home office, and a sixth bedroom is wonderful guest space.
There are tradeoffs for having such extra space. For example, consider the recent rise in heating costs. Overall, you may find that the resale profit associated with those extra rooms will simply pay you back for the $700 monthly heating bills that you had to pay each winter while you lived in the home.
Number of Bathrooms
Again, the traditional home with one bathroom or even one bathroom plus a powder room, are not nearly as attractive to today’s buyers as homes with one bathroom per bedroom, or sometimes per occupant. In recent years, buyers have become more concerned about the number (and size!) of a home’s bathrooms. Some people will not even consider looking at a home with only one bathroom.
Kitchens are KEY. If you purchase a home that you want to sell for a profit in just a few short years, you will need to pay particular attention to the kitchen. You will also want to keep abreast of the hottest kitchen trends, so that when your home goes on the market it has the most updated kitchen in the area.
There are other factors that come into play when thinking about resale value. However, those mentioned above provide buyers with most of the features that they need and some that they want – in a fair and honest way. When you are buying a home with plans to move in just five to ten years, you cannot afford to ignore the resale factors described above.