Whether new construction, recently renovated, or in need of some TLC, resale value should be one of the top conversations between a buyer and an agent. Unfortunately, it’s often overlooked. Why should you consider resale value before even making an offer? Your future may depend on it!
Minimizing risk while maximizing returns through an analysis of current market data yields wise investments and more importantly, knowledgable homeowners and investors. This resale-centric approach continues to encourage astute purchases for families and investors alike.
Three Types of Homes:
New Construction – Upgrade costs in new construction can pile up. Builders often have limited finishing options, but an unaffiliated contractor can provide a greater variety. Discussing upgrade options before making any decisions is the key to a well informed purchase.
Recently Renovated – These homes typically sell at the upper limit of their market range. Homes that show very well (clutter free, fresh paint, new/refinished flooring, updated lighting, etc) sell very well. Buyers looking to settle down for the long haul are in good shape here, but growing families or people who move every 5-7 years, may need to consider the resale value more seriously.
Fixer Uppers – Finally, in a home needing TLC, agents can offer important insight into what values a neighborhood can support. This helps everyone involved by maintaining realistic expectations of resale value, and not over-improving for the neighborhood. This is particularly important for buyers who plan on spending fewer than 5 years in the property.
Types of Updates:
Things that cannot easily be changed include the location of the home and the view. These two factors, particularly the location, greatly affect market value.
Things like the layout, square footage, and number of bedrooms and bathrooms can be changed with fairly significant renovations, which if well researched and budgeted can earn a profit. Adding a third bedroom will typically yield a far greater return than adding a sixth bedroom.
Lastly, the easiest update is the finishes. Finishes include the flooring, cabinets, paint, countertops, doorknobs, moldings, etc. These updates vary greatly in their budget, but again, well researched and budgeted renovations of the finishes can yield a significant return on your investment. This is where the law of diminishing returns applies to real estate and as a result, each individual property needs to be uniquely analyzed for it’s current value and it’s potential resale value.