Location, Location, Location
Before you
are very far into your house-hunting, someone will tell you the oldest real estate joke
that the three most important factors in the value of a house are (1) location, (2)
location and (3) location.
Guess what? It's true! A
house costing $600,000 in Beverly Hills might sell, on a comparable lot in the suburbs of
Peoria, for $100,000. Never in the history of this country have locational
differences been so marked. Closer to home, you know yourself that a modest home in
the most expensive suburb is worth much more that the identical house in an inner city
neighborhood.
From a buyer's point of view:
There are
two ways of looking at this locational preference, which appraisers call situs. The classic advice is to buy the modest house on a more expensive street. Such a house is easy to resell, and it's value will hold up well, for there
are always buyers eager for the prestige of that particular neighborhood. Remodeling
or adding to it is possible too because alterations won't push it out of the price range
for that area.
On the other hand, the most luxurious
house on the street won't ever repay the owner for the money invested. No matter how
elegant it may be, buyers with money to spend will aim at another, fancier neighborhood.
In one way, then, an over-improved house
represents an opportunity for the buyer who wants lots of space and luxury features and
isn't worried about resale value. If you think you will live in the house for
a long time and you like the area, you may be able to pick up a great deal for your money.
Where then are the home
buying bargains?
Sloppy houses, otherwise well
maintained
Family situations of stress: divorce,
death, illness
Property over-improved for it's
neighborhood
The modest house on a prestigious
street
The last is, perhaps, not so much a
bargain as it is a classic good investment.
This Homebuyers Tip was excerpted
from:
Buy Your First Home Now, by Peter
G. Miller
ISBN# 0062733966
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