I get a lot of questions these days from prospective home buyers who want to make sure they buy a home that will appreciate well.
Focus on the lot, not the house
Recently, I had a friend ask me whether a newer home versus an older home would appreciate better. The quick answer: the home isn’t as important as the property. And with lots of brand new homes languishing on the market because they were built-in crowded plats or functionally lacking lots, there is good reason to pay extra close attention to the property. I dug up a recent “red-flag” checklist that was sometimes required to complete when working with a relocation company before they would agree to buy a home from a transferee. The red-flag checklist includes the following that any buyer concerned about resale value should avoid when shopping for a home:
• Style of home not typical for area
• Undesirable school district
• Located near/in view of power lines, water towers, radio towers
• Located on or backs up to a busy street
• Steep driveway or below grade design
• Functional utility issues of lot or home
• Suspected Structural Problems
• Evidence of past or present water damage
• Audible street noise
• Maintenance of surrounding properties
• Mobile homes or trailer park nearby
• Commercial properties &/or apartments in neighborhood
• Undesirable view
• High property taxes for the neighborhood
• Located near railroad tracks
• Abandoned cars on neighboring properties
• Mold or musty odor
• Number of bedrooms not typical or the master bedroom location not typical
• An over improved home
• Located near designated environmental sites
(This by any means is not a complete list, it’s just a good starting point)
In the crazy market of 2005, many amateur investors bought properties they thought were below market value when in reality they were priced to compensate for external obsolescence or in other words, an un-fixable problem. In a seller’s market, you might be able to unload these problem properties by pricing them between 1 to 10% below value of a comparable property without the red flag item. In a buyer’s market, the discount must be even more substantial to overcome the plethora of choices available to buyers.
Use an experienced broker like myself when house hunting
Avoiding problem properties is a great reason to use an experienced REALTOR® as a resource when buying a home. The best agent for the job will have experience working with sellers and buyers. Because only an agent who has sold problem properties in the past can truly understand the problems some of these red flags create.
If you are thinking about a property that is priced at a “give-away” price, be sure to do lots of homework to make sure you’re not buying someone else’s problem.