A common question, especially among savvy first time home buyers, is what will the resale value be like when they sell? Of course they are not asking for a specific price, but rather they question if the future home buyer will find the home just as desirable as they do. In other words, think resale when home buying.
That is a good question, since your home is one of the largest investments you’ll ever make; and you want to make sure you’re making a sound investment. Some things to keep in mind when buying a home and keeping an eye to the resale includes: focusing on current desirability; keeping the home complimentary to the neighborhood; considering added value; and not going overboard with updates and upgrades.
Ask yourself what attracted you to the home you’re purchasing and you’ll have a number of items that probably will make it desirable to the future home buyer. Most likely at the top of the list is the location. “Location, location, location” may be cliché, but it holds true. Items such as the home’s accessibility to metro and major commuter routes are important, along with its proximity to neighborhood and local amenities. Other top attractors to the home possibly include the living space and back yard.
Consider the future plans for the area, as it could affect the home’s resale. You can view the master plan for the county and specific localities on the Maryland-National Capital Park and Planning Commission’s website (montgomeryplanning.org). You can decide if the home you’re about to buy will be impacted by some future development or zoning change.
Another resale factor is how the home compares to its neighborhood cohorts. Is the home similar or does it obviously different? Has the current owner modified the existing living space in any way? Have they converted a three-bedroom home into a two-bedroom home; or similarly, added a bedroom by taking space from an existing bedroom or living area? Such modifications can make the home feel cramped and smaller and affect future resale.
Think about how the home seller updated and upgraded the home. Although not all updates add value, many will increase the home’s appeal to buyers. Keep an eye on the kitchen, bathrooms, and flooring, as home buyers typically consider these as high cost upgrades and can affect resale value. Ask the seller if they hired licensed contractors for major renovations and additions. Also, check for appropriate permits, and ask for plans and invoices.
Additionally, do your due diligence when it comes to “green” upgrades. Although the home seller may have considered the investment into green upgrades money saving, they are not always reliable and can be expensive to repair. And it may be all the rage among home owners, solar panels may come with lease payments and/or replacement costs with little or no net savings; so it’s a good idea to ask for associated lease agreements and utility bills, as well as replacement and maintenance costs.
When it comes time for you to sell, don’t go overboard when with updates and upgrades. Contrary to belief, doing too much to the home could have a minimal return on your investment, or even decrease the value. Updates and upgrades should be comparable to similar homes in the price range to maximize return on your investment. Also, steer clear from short lived trendy designs. Experts recommend to focus on function and substance when making upgrades.
By Dan Krell
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Disclaimer. This article is not intended to provide nor should it be relied upon for legal and financial advice. Readers should not rely solely on the information contained herein, as it does not purport to be comprehensive or render specific advice. Readers should consult with an attorney regarding local real estate laws and customs as they vary by state and jurisdiction. Using this article without permission is a violation of copyright laws.
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