For home buyers, finally finding that home that you instantly fall in love with and must have is an exciting thing, especially if you’ve been searching for a while. As you walk from room to room in your dream home you begin to imagine how your gorgeous, cream colored chaise lounge chair will go perfectly in the living area, how your patio furniture will be arranged out back, and how that 75 inch LG TV will be mounted just right on the family room wall above the brick fireplace. Now, all that’s left to do is make the offer and in the perfect world, the offer is accepted, you go under contract, do your due diligence and close on your fabulous new home.
Yes, your new home is just right for you but what about the next person who buys your home? I know, that would probably be the last thing you think about as you pursue ownership of that home but it’s not a bad idea to think about the next owner. "Why does it matter what other people think about my home, I’m the one who will be living in it" you think. But do you plan to stay in your new home forever? If so, you don’t need to read any further. But according to the National Association of Realtors, the median duration of homeownership in the US is 13 years. So it’s wise to keep in mind how other buyers view the home you’re considering. You may appreciate that quirky bright yellow colored house that stands out from all of the other houses on the street or those energy efficient transoms above the doors of the home but are they a turn off for some buyers?
It may seem unnecessary to think about reselling a home before you buy it, but a good real estate agent (me, me!) will encourage you to think about the resale value of that home because eventually it may need to be resold and you don’t want the headache of an unsellable property.
So, here are 10 home resale value factors to look out for when searching for homes:
1. The home’s current and historical sales price
Historical data drives resale predictions. When you compare the current list price with what the home previously sold for that will tell you if the value has gone up over time, and it’s a reliable indicator of what you can expect when you get ready to resell the property.
2. The Comparables (also what we call "the comps")
Home valuation is determined partly by the comparable home sales in the area. As a real estate agent, it’s my job to find comparable homes, "apples to apples" as we say, as much as possible when it comes to location, distance, type of property, number of bedrooms, bathrooms, etc. Good comps help bring objectivity to the valuation process which is important when you think about resell value.
3. The location and neighborhood
As a Real Estate agent, we cannot legally comment on aspects of a neighborhood such as crime trends but we can direct you to local data to help you make your own conclusions. I always encourage my clients do their own research as well. It’s also important to look at how quickly other homes in the neighborhood have sold; this is an indication of how desirable the homes are among buyers. It’s also good to list additional features of the neighborhood such as amenities, transit access, and homeowner’s associations.
4. The Market
What is the current reality of the local market? If it’s a buyers’ market, inventory is plentiful and you’re likely to get a good deal but if it’s a hot seller’s market like it is now, you may end of paying more. Market information is important when you’re buying a home and when you’re reselling it. As a general rule of thumb, if you’re buying low in a buyer’s market, chances are you’ll make a profit during resale. If you buy high in a seller’s market, it could take more time to realize a gain, and therefore could be a greater risk when it comes to resale.
5. The layout
Layout styles and preferences play a big role in resale value:
*I can research data regarding the number of rooms that sell best in your area and note the bed-to-bath ratio.
*Open Concept: I love an open concept home and many buyers still prefer that openness of a home so it increases the resale value.
*Master Suite: This is seemingly a requirement for most nowadays and if there are dual master suites – even sweeter!
*Split plan: Not to be confused with split level, this plan has the master bedroom separate from the other bedrooms.
*Guest house: In some markets, a well-kept guest house adds value.
6. The age
This one should be a given. The older the home is the more buyers start to think about the lifespan or major elements like the roof, appliances, windows, electrical systems, plumbing and HVAC systems. New construction is always in high demand because there’s nothing like being the first to live in a home (think about new toilets – sorry had to go there). But in a builder-developed neighborhood good resale value will only come after all homes have been sold. Until then, you’re competition is with the builder who can often offer closing incentives and brand-new homes compared to your lived in one.
Some older antique homes have the value-added benefits of being in a desirable historic district, like some of the gorgeous older homes in downtown Concord. However, some buyers will turn away from these homes because of the potential high maintenance costs of owning an older home.
7. The condition
Age doesn’t have as much effect on value as long as a home is kept in top condition. Appraisers adjust homes differently when it comes to age vs condition. They tend to adjust higher for overall condition than age. That means you can buy that older home just continue to keep it well-maintained.
8. Upgrades and updates
Not all home improvements are created equal but upgrades and updates can bring an increase in value. For instance, a complete bathroom renovation will add more value than just replacing the shower door with a fancier shower door. I can help you determine renovation valuations but there is a certain level of subjectivity that needs to be addressed. A neutral-colored kitchen renovation will likely appeal to more buyers for a longer period of time than one that features funky purple cabinets and turquoise and gold mosaic backsplash.
9. Energy Efficiency
Energy efficient homes are attractive to buyers because they will pay lower monthly bills. Energy efficient windows, doors, insulation, and appliances all add value. Tankless water heaters and newer HVAC systems are bonuses, as well.
10. Outdoor appeal
Certain aspects of the exterior of a home play an important role when determining resale value. These include:
*Privacy – such as a nice privacy fence
*Views – desirable mountain or water views can greatly increase value.
*Patios – I don’t know anyone who doesn’t appreciate an attractive outdoor entertainment area. I want that in my next home!
*Landscaping – Curb appeal always adds value to a home. How many times have you kept driving past a home because the grass was high, weeds were in abundance, and old tires were being used as plant containers?? Yes, that’s a thing….
Those are 10 home resale value factors to look out for when searching for homes. Of course, there are more factors such as liens and past issues, storage space and unusual quirks but I hope this gives you a good understanding of why it’s important to think about the resale value when searching for your new home.