Buying a home is a big investment, and it's important to consider not just your current needs and wants, but also the potential resale value of the property. While there are many factors that can influence a home's resale value, some are more important than others. In this article, we'll take a look at 7 key factors that could impact the future profitability of your investment.
1. Location, location, location
The old saying that "location is everything" still holds true when it comes to real estate. Homes in desirable neighborhoods or areas with good schools, public transportation, low crime rates, and nearby amenities tend to hold their value better than those in less desirable locations. You can also check how quickly other homes in your neighborhood have sold as a barometer of how desirable the location is.
2. Neighborhood trends
The trends in a neighborhood can have an impact on a home's resale value. Consider whether the neighborhood is up-and-coming or if it has seen better days. You can look at comps in your area to compare what other homes have sold for in your neighborhood that have a similar square footage, number of rooms, and condition to the properties your looking at to make sure you’re getting the right price. Historical pricing data will also show you if the neighborhood value is appreciating or not. A typical appreciation rate is about 2%-3% annually but this can vary drastically by neighborhood.
3. Size and layout
Homes that are too small or have an awkward layout may be harder to sell in the future. Make sure the home has a functional floor plan and enough space to meet your needs. Preferred layouts include open concept homes, a primary bedroom suite, and a split plan layout where the primary bedroom is separate from the other rooms for added privacy.
4. Condition and age of the home
A well-maintained home is more likely to hold its value than one that has been neglected. Make sure the home is in good condition and that any necessary repairs are taken care of before you buy. To ensure a strong resale value, don't forget about your home's exterior. What's on the outside still counts, so make sure the landscaping is well-maintained and the exterior of the home is in good condition. Similarly, consider the age of the home before you make a purchase; older homes may have charm and character, but they may also require more maintenance and repairs than newer homes. For example, its systems (e.g. plumbing, electrical, HVAC) may need to be replaced and these can be very costly to overhaul.
5. Upgrades and renovations
Upgrades and renovations can add value to a home, but they are typically expensive. They are often personal choices that may not increase the value of your home as much as you believe they might. Consider the cost and potential return on investment of any upgrades or renovations you plan to make.
6. Energy efficiency
Energy-efficient homes are becoming increasingly popular and can command a higher resale value. Look for homes with features like high-efficiency windows, insulation, and HVAC systems.
7. Zoning and development
Zoning laws and potential development in the area can have a big impact on a home's resale value. Consider whether there are any plans for new development or changes to the zoning laws that could affect the value of the property.
When you're buying a home, it's important to consider not just your immediate needs, but also the potential resale value of the property. By paying attention to these 10 factors, you can help ensure that your investment holds its value and potentially earns a profit when it comes time to sell. Remember to take your time, do your research, and work with professionals you trust. Happy house hunting!