Photo: Courtesy of bialasiewicz
Buying a home is likely the most expensive investment you will ever make. However, it could also be one of the most lucrative. If done right, the home you purchase has the potential to make you a lot of money when it comes time to sell or refinance. To get the best resale value, consider the following:
Location is the single most significant factor affecting the resale value of a home. A good location rides the line of dichotomy: near the "scene" but not in the "scene." Close to hospitals, restaurants, shopping, and major roadways, but not close enough to hear the traffic noise. People are looking for a peaceful street in a residential setting that is conveniently located to everything. Within walking distance is even better. Also, homes located on a cul-de-sac hold a higher value because they are quieter and safer for families.
Even if you do not have children, the majority of people looking to buy a home do. For the highest resale value and ease of sale, purchase a home in a top-rated school district.
Choose an area with no reported sex offenders and with a low crime rate.
The prettier and more private the view, the better. Desirable views, such as water or mountains, can increase a home's value by 15-80 percent (homelight.com). A property that backs up to a conservation area or has no rear neighbors is suitable too. Watch out for obviously unattractive views such as proximity to a giant water tower, looming powerlines in the back yard, etc.
The larger the lot size, the higher the property value (bobvila.com). While older suburban homes will typically have larger lots than newer ones or urban homes, look for a home with a respectable amount of space in the front yard and the back. The front and back yards should both be large enough to have lovely landscaping, a backyard patio for entertaining, and play space for kids. For example, the pool should not take up the entire backyard.
Neighborhoods that historically have been sought after will most likely continue to maintain a good value. Look up the public records of the home you intend to purchase and the houses surrounding it and see how the value has increased (or decreased) over time.
Steer clear of the priciest house on the street. You are better off with the least expensive property in the neighborhood because the more expensive homes will bring up the value of your less expensive one, rather than vice versa.
The street view is the first glimpse a potential buyer sees, and first impressions are everything. Look for a property with an attractive landscape but not overdone with an overabundance of plants that will be difficult to maintain. Bad landscaping can diminish the value of a home by 5 to 15 percent (homelight.com). The house itself should have an appealing footprint with a well-cared-for exterior.
It is best to purchase a home that does not have any major potential repairs on the horizon because the more money you have to put into the house, the less return you will get on your investment. Investigate the following:
You want to pay attention to the age of the roof. "Slate, copper, and tile roofs can last more than 50 years. Homeowners with wood shake roofs should expect them to last about 30 years, while fiber cement shingles last about 25 years and asphalt shingle/composition roofs last about 20 years" (moneyusnews.com).
Roofs are costly to replace (on average USD 5,000-USD 28,000) (5estimates.com), and depending on the situation, insurance may or may not cover the replacement. Also, many homeowner's insurance companies will not issue policies for roofs near the end of their lives.
An HVAC system lasts about 15-20 years (thehumbledhomemaker.com). The cost to replace an HVAC system averages roughly USD 5,000-USD 10,000 (homeadvisor.com).
3. Water Heater
A water heater needs replacing about every 8-12 years (thehumbledhomemaker.com). Replacement can range on the low end from USD 550 to the high-end USD 10,000 or more (homeadvisor.com).
4. Septic System/Drain Field
Septic tanks cost USD 3,043-USD 9,797 (USD 6,388 on average) (homeadivsor.com). A complete septic system, including a leach field, tank, and piping costs USD 10,000 to USD 25,000 (homeadvisor.com). Installing a leach field costs USD 5,000 to USD 20,000, depending on the type (homeadivor.com).
5. Well Pump
Well pumps typically cost between USD 924-USD 2,484 to replace (homeadvisor.com).
Note: Foundation, plumbing, electrical, windows, driveway, and walkways are all big-ticket items that should also be evaluated and deemed in good condition to get the best resale return.
These days, most people want a split floor plan with an open concept, a big kitchen, family space, at least a two-car garage, plenty of storage space, and natural light. Single stories are preferred, or at least a home with a first-floor master bedroom, but if you are looking at homes on a street where most of the houses are two stories, you do not want a single-story home surrounded by two-storied ones (thebalance.com).
For best resale results, choose a home with at least three bedrooms and two bathrooms (one being a master bathroom and at least one with a bathtub). Even better, go with a four-bedroom home and two and a half or three baths. Again, the majority of buyers are families who need the space.
People want updated kitchens and bathrooms. According to Remodeling Magazine, a minor kitchen remodel increases a home's value by about USD 18,206, and a major kitchen remodel adds USD 40,216 in value to a house (homelight.com). Remodeled bathrooms add an average of USD 13,688 to USD 49,961 in value (homelight.com). Hardwood floors and decorative molding are desirable as well (bobvila.com).
If you are purchasing a home with an outdated interior, you will not get top dollar for it when you go to sell. Doing the renovations yourself can be costly, and you will make less profit on the home after you subtract out your expenses.
While homeowners’ associations (HOAs) can be a pain, a deed-restricted neighborhood offers protection to your home value by preventing your neighbors from doing something crazy in their yard or neglecting their house; thus, bringing down your property value. This security is appealing to buyers and can increase your home's desirability.
Loving the home that you purchase is a deciding factor, but it is critical to consider what goes into making a property desirable so that you benefit financially when it is time to sell or refinance.