Location, location, location — you’ve heard it a thousand times, and you can’t beat it in determining the value of a home. The neighborhood you live in and the value of the homes around yours have a big effects on what your home is worth. If you purchase the most modest house in a high-priced community, you can do very well for yourself in terms of your investment. The more expensive houses will raise your home to a higher value than it would command in less expensive neighborhoods.
You have an equally sound investment if your home is in the same price range as the ones around it, but if you buy what you consider an attractive house that happens to be in a bad neighborhood, you might as well forget your potential investment. Location is that important.
Real-estate agents and everyone else engaged in buying and selling homes agree that new homes are not necessarily better buys than older houses. What determines the value of each, is that all-important factor: location.
Pay attention to homes on the street you are interested in.
You don’t want to buy on a street that is fading fast or that has already become off limits to sensible investors. There are neighborhoods in many cities and towns that are making a comeback from decay and decline. If you do not know where those enclaves of revitalization are, you can discover them by reading the news articles in the real-estate section of a local paper, by going on house tours (most community associations sponsor one each year), by attending open houses, and of course, by driving by. When you see three run-down houses, then one dressed-up — perhaps sporting a window box of seasonal flowers — then another being renovated a few doors down, and an overall air of busyness and repair, you will know that you have come across your area’s newest revival neighborhood.
These communities offer some fine bargains for the novice who feels priced out of just about everything else. The trick here, of course, is to move in before renovation is completed and the community becomes red hot for buyers. Prices are likely to climb steadily, and it may quickly become an area too expensive for many house hunters. The biggest problem you might encounter here is in fixing up the house — many houses in once run-down neighborhoods will need substantial rehabilitation.
Tips to keep in mind as you look at resale homes
Be aware of a community with too many “For Sale” signs. Do all those home sellers know something you do not? Is there a master plan for the area that shows some new, undesirable construction is moving in soon? Too much competition, with too many houses on the market at the same time, drives down the value of each property. If you can see no apparent reason for so many signs, it would be wise to head for the town hall to see what is on the planning books for that part of town.
Avoid the house that has been over-improved for its block. You do not want the highest priced house in the neighborhood. You will most likely not get your money back when it is your turn to sell.
Look for a house with a style that fits in with the others in the neighborhood. A California-style, ultracontemporary home in a community of two-story colonials may seem fun now, but the different style could make the house difficult to sell when the time comes, if you cannot find others who share your enthusiasm for alternative architecture.
If you expect to move again in just a few years, buy the most ordinary home you can find, one that can easily satisfy the greatest number of house seekers when you do decide to sell. This has long been a successful buying strategy for corporate transferees and military families.
Check into commuting time, schools, houses of worship, and nearby shopping.
Be very sure, if you want to make any major changes to the appearance of the house, that the zoning laws will permit you to do so. Zoning laws could apply to building a sunroom or a greenhouse, constructing an extra bedroom or a garage, putting in an in-ground pool, and even building a sturdy tool shed.
Location is not the only factor that determines satisfaction and investment appreciation; features should also be considered. Some features are good, and some are a detriment to a house.
Make sure no pending zoning issues are going to occur, such as new roads nearby or multifamily buildings going up in a single-family development. You can ask your real-estate agent to check for pending zoning issues.
As you go through homes you will, understandably, be caught up in the look of each one and how it is decorated. But you are choosing your future home, so you must remember to evaluate it in terms of your own lifestyle, needs, and goals, not those of the current owner.