Buyers Beware: 3 Points to Ponder About a Home's Location
When buyers are on the hunt for a new home, they're usually very focused on one thing: the house. Buyers can lose objectivity if they fall in love with one, and the thought process becomes akin to one of those romantic photos with fuzzy edges—the only thing in focus is the house.
What those fuzzy edges obscure, however, is just as important as what's in focus. So, be sure to identify the impractical features of a home you love—not only for your own comfort and enjoyment, but for the home's future value as well.
"Location, location, location" isn't just a silly real estate mantra—it's a warning. Pay heed to the neighborhood and surroundings if you want to avoid losing money when you sell the home.
1. School District
Not everyone can afford the higher cost of homes in a quality school district, but we can avoid purchasing a home in a district that will make it difficult to sell in the future. Even homebuyers without children should look into the area's schools before signing on the dotted line.
For homebuyers with children, good schools are at the top of the list, according to Realtor.com, and many are willing to go over budget to purchase such a home.
Experts agree that homes are worth more in good school districts. What they can't seem to agree on, however, is how much more. One study claims that the added value is $16,000 on average. Another study, from the Brookings Institute, says homes in quality school districts may fetch up to $205,000 more than those in a low-scoring district. Finally, another expert says to simply slap a 23 percent premiumonto a home in a good school district.
Whatever the amount, savvy buyers know that an area's schools will have an impact on a home's future value.
2. Vacant Land
Being surrounded by open space is lovely, isn't it? The peace, tranquil views and that feeling of seclusion one derives from living in such a location is worth paying more for—or is it?
Nearby government set-asides of open space are in demand for homebuyers. Privately owned vacant parcels, however, should raise red flags.
Even current zoning of parcels isn't set in stone, as neighbors in a Minneapolis suburb learned last year. Most homeowners in a 25-year old subdivision there purchased their homes because the area was surrounded by open space. What they failed to realize, however, was that the surrounding parcels were zoned for commercial development. In fact, many of the newer homeowners were shocked when they learned of the city's plans to approve the construction of a 24-hour superstore right across the street. Their lovely, wooded neighborhood would now be expected to handle three times the vehicular traffic, round-the-clock hustle and bustle, and late-night deliveries to the back of the store, which happens to face the neighborhood.
Before you decide to purchase any home that has vacant parcels of land nearby, it would be wise to check the neighboring property's zoning.
3. Neighboring Homes
It's easy to become smitten with the cutest house on the block, but if that house is the only cute one in the neighborhood, you may want to consider your purchase more carefully.
Foreclosed homes, certain commercial concerns (funeral homes and power plants, for example), messy, neglected yards, and a sex offender in the area can all drag down the value of nearby property, according to the Appraisal Institute. That reduction may be as much as 15 percent.
Experts with the Appraisal Institute suggest taking a leisurely tour of the neighborhood. Something as simple as shoddy landscaping or peeling paint on a building can knock 5 to 10 percent off the value of nearby homes, the Appraisal Institute's president, Joe Magdziarz, told MSN Money.
Folks in the real estate industry are quite diligent when it comes to recommending various inspections and tests of structural elements to buyers. Many agents, however, may neglect to counsel their clients on the financial aspects of the purchase.
Your home is also an investment and requires due diligence to ensure that it's a viable one. Do your homework, beyond admiring the snazzy kitchen and dreamy master bedroom, and you'll sleep well knowing you made an informed investment.