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The 8 Factors that Affect a Home’s Resale Value

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Although a homebuyer’s first focus should always be finding a home that is a good match for their needs and wants, the wise purchaser plans for their future, regardless of the type of home they purchased. The resale of their home may occur a few years or many years in the future, but sooner or later, the probability that the home they buy will be back on the market is high. Thus, today we ask (and answer), should I consider the resale value when buying a home?

You may also be interested in What is the resale value of a single-family home vs condo vs townhome.

The ultimate consideration to determine if, and by how much, you should consider resale value is how long you plan to stay in your new home. The shorter the expected ownership, the more you should consider resale factors; the longer your expected occupancy, the less concerned you can be. Why is that? The reason is if you are in the house for a long time, you will get many years of value from it and will want to ensure it’s as perfect for you as possible. Furthermore, after many years, the home’s price appreciation should make up for any unique or weird things.

According to the National Association of Realtors, most US citizens live in a home for a median of 13 years before selling it and moving on. Keep this in mind as you read through this article.

1. Location and amenities

The primary and most crucial factor that plays a significant role in determining a home’s demand is its location. If you are buying a single-family home, then having something near schools and groceries is probably essential for future buyers (assuming families will want to move in). But if you are purchasing a condo for young adults, proximity to bars and restaurants may be more appealing. Keep these in mind:

Positive features

  • Proximity: Homes located near good schools, hospitals, shopping centers are considered very beneficial.
  • Noise: Low traffic, peaceful areas are a priority for most family buyers.
  • Employment opportunities: One of the signs of a modern and developed site is the number of employment opportunities in that place.

Negative features

  • Isolated: Homes built in the middle of nowhere. Although the seller may enjoy living in solitude, most buyers want to be within a community.

2. Size, space, and liveable area

The general principle used to estimate a home’s value is considering the price per square footage. This price varies from local to local, so speak to your realtor to learn what the average “price for foot” is in your buying area.

Positive features

  • Average size. Find a home that is not too large or too small for the neighborhood. If it’s too large, it’ll likely be too expensive, and if it’s too small, many buyers may want more space.
  • Amenities. Make sure the house is well equipped with the right appliances and places for them. For example, you may not want a large shower in the master, but the next buyer may, so be sure to have the plumbing ready for a bigger water flow.

Negative features

  • Over-personalization. We all want to make our homes exactly how we dream of them. That said, it comes at the expense of its resale value when the house is too personalized.
  • Too large or expensive. Ask your agent for market comparables. How does this home compare? If it’s too large or too expensive, it will be challenging to resell.

3. Age and Condition

Older homes are appraised at a lower valuation than newer homes, all else being equal. This does not mean that older homes will always, unconditionally, be priced lower. The real issue is the integrity of the house, which usually deteriorates with age. If the previous tenants have made sure that the house is in peak condition, with all its systems like HVAC, electrical, etc., appropriately maintained and accommodated for changing trends like being more energy-efficient, the home will likely be valued higher.

As a result, most buyers prefer having a professional home inspection done before making any final decision or offer to the seller. This gives the buyers a rough idea about the necessary repairs needed on the house and the additional cost required to make it liveable. These home inspections reveal the home’s different systems’ quality and durability, like the home’s integrity and foundation, the heating, and A/C, in-home appliances, e.g., cabinets, cupboards, sinks, etc.

4. Stability and neighborhood

In general, a neighborhood that has shown a history of stability over the years will usually be more desirable than those that have demonstrated swings–either up or down–in desirability (and value). The “hot area” of today can quickly become the slums of tomorrow.

Before buying a house, buyers should research the crime rate of that area, plans for any new infrastructure that could upgrade the neighborhood, and sell trends in that region. A low crime rate provides security, which everyone prefers, most specifically by families with children. This will make the home easier to sell in the future, and is located in a particular region may even increase its price. 

5. Floor plan and natural light

While an individual buyer’s tastes may vary greatly, there are certain features that appeal to most homebuyers that are consistent through the generations.

  • Open and friendly plan. A home with too many twists, narrow hallways, and a minimal living space won’t bring too many buyers. Such dwellings can feel dingy and cramped, acting as a significant deterrent when it comes to resale. Most buyers prefer open, spacious planning with large living areas like dining rooms. So homes that provide a ‘family-friendly’ environment are considered a priority.
  • Open kitchens. Big open kitchens are all the rage these days. People love to host guests while they cook. Heck, some are even foodies or food bloggers and need the open space to work.
  • Windows and natural light. The lack of natural light in a living space can make most people uncomfortable and create a gloomy atmosphere. Most buyers look for properties with huge windows that would light up the inside of the home and give it a warm, friendly vibe. 

6. Pricing

One of the things that can immediately put off potential buyers is an unrealistic price tag. A property’s previous selling prices, along with changes in the real estate market, as well as current market trends, should be factored in when setting a resale price. Seller’s expectations and market reality sometimes differ, and that’s why we always recommend getting a professional home appraiser to help learn what market comps are.

The ideal home value lies around the average selling prices of homes in that area during that time, making necessary adjustments to the amount by considering the home’s specific features. 

Additionally, if a home stands out too much in its neighborhood, e.g., it may be too large when compared to others, it can be a hard sell. When a home is too large, buyers tend to shy away because they generally don’t want to be the most expensive neighborhood.

7. Curb appeal

The first thing that buyers will see is a home’s exterior. If it is inviting or appealing, they’ll be more likely to arrange a home visit to look at the interior. However, if the outside looks shabby, buyers may assume the same about the property’s inside. This initial disappointment can push away potential buyers and can negatively impact the resale value.

A charming curb appeal is entirely under the owner’s control, and with simple maintenance like trimmed bushes, mowed grass, etc., they can stay ahead in the game and drastically increase the resale chances.

8. Adaptability

In some cases, custom-built homes reflect the current owner’s unique personal taste and design preferences. These can be hard to sell since most buyers generally don’t care that the seller has an underground pool or walk-in wine cellar.

Therefore, to increase a home’s resale potential, it should be adaptable. This means having a layout that gives plenty of room for modification. So a house with an easily changeable structure by doing simple things, like knocking down a wall for expansion or making bathroom improvements, is likely to be more popular among buyers.

Another more popular example of a recent trend is having a garage that can be turned into another unit (called an ADU, for Accessory Dwelling Unit). Having an ADU allows for future buyers to decide if they want to keep it or convert it. That is a perfect example of adaptability.

Wrapping it all up!

Now that you know the factors that affect a home’s resale value, you are prepared to make the right decision for you. Researching more on the type of home you want and applying the different factors that could affect its value in the long term beforehand can result in a good purchase for the present and help you gain a highly profitable passive investment. It’s advisable to consult a real estate agent in this regard who can guide you more on the subject, focused more on the specifics of your local area’s market.

Disclaimer: The above is provided for informational purposes only and should not be considered tax, savings, financial, or legal advice. All information shown here is for illustrative purpose only and the author is not making a recommendation of any particular product over another. All views and opinions expressed in this post belong to the author.

Scott Teesdale

Written By Scott Teesdale

I use data and technology to help Millennials navigate the ins-and-outs of buying or selling a home in today's market. From appraisals to mortgages to zoning, I cover it all with the goal to teach others. Connect with me on social via the icons above.