For most buyers, selecting a home is a personal and emotional decision, and it should be. The home you select may have some defects, yet meet your needs in many important ways. No home will be perfect.
At some point in the future, you may need to re-sell your home and you will want to receive the annual appreciation on your home that is typical for your area. Now is the time to look ahead and anticipate 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, you will be able to resell the home at the highest price possible for the market.
Here are seven categories of potential re-sale problems that you should consider before choosing a specific home:
Lack of Yard
Does the selected property meet the needs of the typical buyer for the neighborhood in terms of lot size? Buyers tend to pass on homes that have significantly less usable yard than other homes in the neighborhood.
Unusual Easements or Restrictions
Unusual easements, deed restrictions, or an unexpected lot configuration discovered during the closing process should be cause for re-consideration, with an eye toward future marketability. Does the lot contain an access easement to another property? Is there an encroachment on the property? Are there regional pipelines underground? Are the lot boundary lines what you expected? Is flood insurance required?
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. Of course, this would not apply to urban areas.
In a subdivision of properties with similar road frontage, buyers will avoid this type of lot. These lots have very little street frontage, and there may be a building in front of the home. An acreage flag lot in a country setting may be an exception.
High Tension Wires
The general reaction by buyers to high tension wires crossing near the lot is to simply eliminate the choice.
Many buyers will pass on homes with excessively steep driveways. If they cannot comfortably park the car, they won't get out of it to view the home.
The noise related to a busy street is a turn-off to many buyers, especially if the busy street is in front of the house.
If the building behind the home looks down onto the backyard or into the family room, this will be a sales objection to many buyers. Most buyers want a certain degree of privacy in the back yard. This may be able to be mitigated by trees or screening.
Does the neighborhood show pride in ownership? If you see tear downs and new construction, an older neighborhood may be going through a renewal period, and may be a good risk. However, if the market data indicates that values are declining, you should be cautious.
Safety or Security Problems
If you see or hear of security problems—drug dealing, frequent burglaries, or safety concerns, you may wish to check the facts and data on these issues before buying. If these kinds of problems are on the rise, you could have a serious resale issue.
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 when you re-sell, your potential buyers will be limited to this same set.
In most cities, areas that are closer to a business district tend to have a larger buyer pool than homes located in remote areas. Regardless, you may choose the privacy and setting of a country home over resale potential.
No Comparable Sales
It is important to understand the underlying reason for few or no comparable sales. The home may be very unusual compared to homes around it, or the market may be slow. This could indicate a possible future re-sale problem.
Extended Marketing Time
Has the selected home 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
The possibility of an increasing supply of homes in the selected neighborhood may be a concern, particularly if you will be in the home for less that three years. A common source of excess supply is overbuilding by homebuilders in the area, or it may be caused by a decline in the economy of the area
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 pass on homes that lack these features. In an area of mostly senior 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.
Homes that do not seem to belong in the neighborhood may have trouble selling. For example, an urban loft style home may be popular in older, eclectic areas, but would be hard to sell in a uniform suburban neighborhood.
Water Drainage Problems
Poor water drainage is a serious and costly remediation problem. Talk with an expert about improving the drainage, and evaluate any damage caused by flooding or standing water. You should have an improvement plan ready before proceeding.
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 that you understand the source of the problem, and the cost to repair, before taking on a house with structural problems.
Excessive repairs noted on inspection reports indicate that the house was not maintained or was poorly constructed. You may need to 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 is expensive to remove. It will be important to document your repairs in order to show a future buyer that these problems have been solved.
If a previous insurance claim was the result of fire or flooding, you should have full disclosure. Large insurance claims are a red flag, and may result in difficulty in obtaining insurance on the home. Insist that you be given the facts about previous insurance claims. Many homes have had repairs, such as hail damage, covered by insurance, and these will not be a re-sale problem.
If the sales price includes a number of costly upgrades, you may not be able to recoup their cost. For example, imported fixtures, unusual craftsmanship, exotic woods, high maintenance gardens, or artistically decorated walls may not have a market value equal to their cost. After a home ages, these finishes may drop substantially in value. In some areas and price ranges, swimming pools and tennis courts do not contribute the full amount of their cost to the value of the home.
Homes that are overbuilt, or have excess acreage for the area often have a difficult time recouping the additional cost. Most people feel safer buying at the mid level of value in the neighborhood.
Non Functional Floor Plan
Floor plans that make living in the home difficult will turn away future buyers. Homes with excessive level changes, poorly proportioned rooms, awkward access to the outdoors, low ceilings, or few windows may sell, but at reduced prices. This may be an opportunity to take down walls and make creative changes to improve the marketability of the home. Your will need design skill, reliable contractors and an appropriate budget.
Out Dated Finishes
Many resale problems are simply due to outdated finishes. Buyers with decorating skill and a sense of style can transform these homes. Remodeling adds a level of risk and difficulty to the home purchase, but it may also add a higher level of satisfaction and monetary reward for the buyer. Working with an agent who is able to offer suggestions on changes that add the most value may help you create a gem to resell sometime in the future.