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The selection of a home is an emotional decision, and it should be. You
should tap into your emotional knowledge when choosing a home. Many
personal factors will influence your selection of a place where your
family can live comfortably and safely.
However, at some point in the future you may need to re-sell the
home. Most people would like to receive at least 4% annual appreciation
on the sales price of their home. Now is the time to look ahead and
consider any possible sales objections that you may encounter. The
value of your home as an investment is directly related to its
marketability. If it is sought after by other buyers, your home will
sell at the highest price possible for the market.
The issues noted here are not intended to be deal killers. The home you
have selected may have some defects, yet meet your needs in many
important ways. No home will be perfect. Your purchase decision should
be given a careful evaluation and review with an eye toward resale.
Home flippers look for homes with marketing problems such as these.
Homes priced below market are perfect for their remodeling solutions.
You, too, may think creatively when considering a home. Many problems
can be corrected or mitigated. With good design sense, you may be able
to make the necessary decisions to improve the home, and perhaps do the
work yourself. Or, you may be willing to get design help and use a
builder for the work. Remodeling adds a level of risk and difficulty to
your home purchase, but possibly, a higher level of satisfaction and
monetary reward.
Here are 7 potential re-sale problems:
1) Site Difficulties
Unusual Easements or Restrictions
If unusual easements or restrictions were not disclosed up front, you
may not be aware of them until you see the survey and title work. If
you discover these, I suggest that you take a step back, and consider
whether you will accept an unusual easement or restriction on your use
of the property. Some examples: neighbors may cross the property, house
expansion is limited, or major pipelines are underground.
Lack of Yard
If a home has much less yard area than others in the neighborhood,
buyers tend to eliminate this choice. A steep slope may make the
grounds difficult to use and maintain. Yards that have been terraced or
landscaped may be exceptions. Compare your property to the yards
offered by competing homes.
Commercial View
Homes in suburban areas that view office buildings or retail centers
are less attractive to buyers. Buyers choose suburban neighborhoods for
their concentration of single family homes, separated from commercial
areas. This may not be a problem in more urban areas.
Flag Lot
These are lots with a long narrow strip, leading to the area where
the house is placed. Your home will have almost no street frontage, and
there may be a building in front of your home. A flag lot in a country
setting with a long driveway leading to a large tract may be an
exception to the rule. In a subdivision of homes with road frontage,
buyers will avoid this type of lot.
2) Likely Objections
High Tension Wires
The general reaction by buyers to high tension wires crossing near the lot is to simply eliminate the choice.
Steep Driveway
I have shown many buyers who will not get out of the car when the driveway is unusually steep.
Busy Street
The noise related to a busy street is a turn-off to many buyers.
This is more of a problem if the busy street is in front of the house.
Too Exposed
Most buyers want a certain degree of privacy in the back yard. If
the building behind your prospective home looks down on your backyard
or into your family room, this will be a sales objection. This could be
mitigated by trees or screening.
3) Neighborhood Concerns
Declining Values
If you perceive the neighborhood to be declining, this is a must to
avoid. Choose areas that show pride in ownership. However, if you see
tear downs and new construction, then the neighborhood may be going
through a renewal period, and may be a good risk.
Safety or Security Problems
If you sense that there are security problems - drug dealers,
robberies, or safety concerns for your children, take a step back and
look at the facts and data on these issues before buying. These kind of
problems will turn away buyers fast.
4) Market Matters
Seasonal or Limited Market
Some homes have a limited market - a vacation area, a primarily
student market, or an age restricted subdivision. This may suit your
needs, but keep in mind that your re-sale will be limited to this set
of buyers.
Remote Location
In most cities, areas that are closer to downtown tend to have a
larger buyer pool than homes located in remote areas. However, you may
choose to trade the privacy and setting of a country home with the
resale potential.
No Comparable Sales
This indicates a possible re-sale problem. The home may be very
unusual compared to homes around it, or the market may be slow.
Understand the underlying reason for few or no comparable sales.
Extended Marketing Time
Has the home that you are considering been on the market a long
time? Was the price simply set too high? Has the market been slow? Or,
is there a problem with the house that you will need to correct?
Oversupply of Homes
This is a fundamental re-sale problem. If the balance of supply and
demand tips in favor of buyers, then sellers will have to compete more
aggressively, and prices are usually driven down. A common source of
excess supply is from new homebuilders in the area. Or, sales may be
slowed by an economic recession or high interest rates. The oversupply
of homes on the market may be a temporary situation.
5) Non-conforming Styles
Lacks a Typical Amenity
In an area where nearly all homes are on the golf course, or have a
pool, or include a garage, buyers will tend to overlook homes that lack
these features. In an area of mostly older buyers, a home with the
master upstairs may have trouble selling. Look carefully at what is
generally offered in a given area to the majority of buyers.
A-typical Style
Homes that do not fit in to the neighborhood may have trouble
selling. For example, the urban modern style may be a good fit in older
eclectic areas, but would be hard to sell a uniform suburban
neighborhood.
6) Inspection Issues
Water Drainage Problems
Poor water drainage may be a serious and costly remediation problem.
Talk with an expert about improving the drainage around the house, and
evaluate any previous damage caused by flooding of the interior or
water standing under the house. Be sure that you have all the facts on
the table and an improvement plan ready.
Structural Defects
Structural defects have an underlying cause. They may be due to loose
fill on the lot, clay soil, drainage issues, or poor construction. It
is crucial to know the source of the problem, and the cost to repair,
before taking on a house with structural problems.
Inspection Issues
Excessive repairs noted on your inspection report indicate that the
house was not maintained or was poorly constructed. Be prepared for
some serious work on the house. An incorrect application of stucco or
other siding may have water damage or mold behind it. A mold
infestation may be expensive to remove. Be prepared to document your
repairs in order to show a future buyer that the problems have been
completely solved. These issues tend to have some stigma attached.
Insurance Claims
It is important to know the facts about a previous insurance claim.
If it was due to a fire or flooding problem, you should have full
disclosure. Large insurance claims are a red flag, and may result in
difficulty in obtaining insurance on the home. Many homes have had
repairs covered by insurance, such as hail damage, and these are not a
re-sale problem.
7) Improvement Obstacles
Costly Improvements
You may not be able to recoup the cost of certain improvements to your
home. These may include imported fixtures, unusual artistry or
craftsmanship, exotic woods, European appliances, rare plants, hand
decorated walls, etc. If these finishes are similar to locally
available materials, they may not have a market value equal to their
cost. In general, swimming pools and tennis courts do not contribute
the full amount of their cost in the value of the home.
Over Improved
Homes that are over improved for the area, or have excess acreage,
often have a difficult time recouping the additional cost. Most people
feel safer buying one of the cheaper houses in the neighborhood.
Non Functional Floor Plan.
Floor plans that make living in the home difficult will turn away
buyers. Excessive level changes, rooms that are out of proportion, poor
access to the backyard, low ceilings, few windows, and other layout
issues will result in a re-sale problem. This may be an opportunity to
take down walls, add windows and doors, and make creative changes to
improve the functionality and value of a house. Design skill and a
fairly high budget will be necessary.
Out Dated Finishes
Most homes have some outdated finishes - from needing freshening up, to
a complete makeover. This is where design skill and perseverance can
completely transform a house. If you are new to remodeling, consider
your budget carefully. Often the work required is quite extensive and
may grow as the project develops.
About The Author
Roselind Hejl is a Realtor with Coldwell Banker United in Austin, Texas. Her website - Austin Texas Real Estate - http://www.weloveaustin.com - offers homes for sale, market trends, buyer and seller guides. Let Roselind help you make your move to Austin, Texas.
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