Resale Considerations When Buying a Home
BY LISA GONZALES, Realtor/Agent
When looking to purchase a home the last thing on a buyer’s mind is selling the home. However, this is something that should be factored into your home buying process and should definitely be something a buyer discusses with their agent. Before entering every property that you as a buyer views, one of the most important things you should do is to take a good look at what you can see aesthetically all around you. Are there well maintained homes in the immediate vicinity of the house? Is there cars parked everywhere in the street making getting in and out of the drive way difficult, or are most cars parked on driveways? Are lawns cut and front yards taken care of, or are yards overgrown and homes looking run down? Can you see any huge water towers, pylons, or commercial buildings directly behind the home, or is there another home behind or a greenbelt?
Just because you don’t mind the huge pylon, water tower, or 20 steps up to the front door, it is important that you think about what potential buyers you will be eliminating when you go to sell. For example the 20 steps up to the front door that you can sprint may potentially eliminate buyers who are elderly, have a physical disability, and some families with young children. The huge neon gas station sign that didn’t bother you because you work nights, may bother those that do not and would prefer not to have it shining in through their bedroom window. So let’s fast forward 24-36 months and suddenly you find out that your job is being located to another state, or any number of a thousand unforeseen circumstances alter your original plan of staying in the home long term and you need to sell your home quickly, I can guarantee it will be at this precise moment that you wish you had a crystal ball and been able to look into the future and know that if the water tower or electrical pylon was not directly behind your home that you could potentially have sold your home in one month, rather than the three, four or five months it will now take to sell, or maybe more.
If you find a home that has a nice open view from the back yard also bear in mind that over time that view could change to become the view of someone else’s back yard, gas station, or any number of things. Going to the city to find out what the land is zoned for, and if there are any plans for future development will also be beneficial as you may be paying top market value for the home and view, yet when you go to sell the view is not the one you bought.
According to the US Census Bureau only 37% of Americans have lived in their home for 10 years or more, with the median being 8.7 years. It seems gone are the days when families spend 40+ years in the same home like our grandparents did. If a buyer pays the exact amount of their mortgage payment each month and no extra, it will take around 5-7 years before they begin to pay down the principal since most of the monthly payment prior to this time goes towards paying the interest.
Depending on how the economy in your area is doing and how strong the housing market is, it can take around 4-5 years for a home to increase enough in value to make it worth while selling. The average overall cost of selling a home is around 8% of the list price so lets do the math! If you list your home for $250,000 you could expect to incur around $15,000 in real estate fees, almost $1,900 for the title policy, around $800 in title company fees, and about $500 for a home warranty making a grand total of $18,200, and this figure does not take into account the cost of any repairs that may be identified during a home inspection.
Since most of us do not have a crystal ball, or the capability of predicting the future, you want to minimalize upfront the chances of you having to bring a big fat check to closing by factoring into your home buying process any obstacles that may lay in your path in the future when the time comes to sell, and you need to get maximum value for your home to make a profit, or at least breakeven.
I know this first hand because I had clients who purchased a home that was going to be their forever home. However, 10 months later due to unforeseen circumstances they were forced to move. When we viewed the home before they bought it, I commented that the home did not look any different on the outside to any other home on the street, which meant that there had to be something superior on the inside for this home to beat any other competition when the time came to sell. When we went inside the home was beautiful and had expensive upgrades and finishes that the other homes did not have, along with a beautiful outdoor area . After doing my research which involved me comparing like for like what had sold recently, the number of days those homes were on the market before selling, what sellers were giving towards seller concessions, and spending hours looking at pictures of all of the homes internally and externally, I was able to advise them that in my opinion this home would appeal to buyers more than the others, it would sell quicker than the others, and would hold its value more than the others, along with it not needing no where near as many upgrades. So, when 10 months later they asked me to list the property I knew that selling the home would not be my challenge, however getting enough for the home to cover all of their closing costs and walk away without having to bring money to the table would be since they had not been in the home long enough to build equity. Since I had done my homework prior to them purchasing it, I knew that I could market the home as being far superior to all of the others because of all of the features that it had. For them to walk away without owing anything I had to list the home $26,000 higher than they purchased it for 10 months earlier. The first day the home was on the market we got full asking price. The buyers loved the home, and told me the reason they purchased it was because the wife had been looking for a home that had some of these specific features, and no other homes that they looked at in the area had them. When it came time for the appraisal I did a comparative market analysis and provided the appraiser with this to show why I had listed the house at the price that I had. I won’t pretend that I didn’t hold my breath or have sleepless nights wondering if I could pull this off! The appraisal came in exactly where I had priced the home, and my clients after only living in the home for a short time sold the home and walked away with just under $5,000 profit after paying all realtor fees and title costs. This would not have happened if we had not had the discussion before purchasing the home about its resale value.