Buying a house for its resale potential

[W2R]

In the "What's your dining room used for?" thread, Khan said:

Interesting observation.

People don't want/use formal dining rooms but insist the house have one because the next person buying the house doesn't want one either but thinks the next person down the line will want one...

That is so true! Then Martha said a lot of people feel they need a family room and a living room for the same reasons.

I could use a family room for a home gym, but honestly I have a 3 bedroom 2 bath house because they have better resale potential, or so I am told. I really only need a 2 bedroom 1 bath house if I could have a large luxury shower in the bathroom. But then, the next person down the line would want a tub and two bathrooms, right?

I wouldn't care at all if I lived on a busy street, but those families with kids wouldn't want to live there so I don't dare buy such a house.

Right now, I am painfully scraping off wallpaper that I actually like, to some extent, to start getting the house ready for resale (and we all KNOW that buyers never like wallpaper, right? )

When you buy a house, is your decision influenced by resale? In what ways?

 

[Khan]

I bought this house (I was married then) September '78.

It is small and old.

It took me several years to get someone to remove the bathtub (that will lower resale value). I don't care. House is worth $70K on a good day.

I am considering tearing down this house and replacing it with a smaller more efficient structure.

Conspiracy theory: the real estate people keep telling us this stuff because it gives them more money. What would happen if people really bought/built what they wanted, instead of what they are told they (and other people) should want?

I heard the same crap when I bought a car in '89: 'a stickshift will lower resale value'; what's the resale on an 18 year old econobox?

This is one of my personal hot buttons/rants.

 

[Brat]

As you consider your options don't, as the saying goes, cut off your tongue to spite your face.

Tearing a house down and rebuilding it will get you a construction loan, which isn't cheap. If you engage a professional to help you with a 'remodeling' plan that can be accomplished in stages will avoid a lot of zoning and financing problems.

Somewhere I recall a member asking if it were wiser to buy a newer home on a small lot or an older home on a large lot. IMHO, if you intend to make major modifications choose the latter. My DD did just that in Los Altos at a much greater scale than almost anyone on this board would contemplate, but hers was a 'home improvement' loan, not a construction loan - when you are financing several M just the mortgage terms are real money.

 

[Nords]

When you buy a house, is your decision influenced by resale? In what ways?

CFB and HGTV have taught me that 99% of prospective homebuyers can't handle reality, and the other 1% will drive you nuts while they lowball you.

So when we sell a house we'll have it in perfect condition-- fresh paint, new carpet if necessary, everything green & growing (no matter how much irrigation it takes), and all in neutral colors.

As far as resale issues go, we wouldn't do anything to a house that wouldn't normally be palatable by a timid & uneducated buyer. "Normal" colors, carpets, counters, & tile. No wallpaper. Low maintenance. Open floorplan as much as possible, no subdividing rooms for "extra" bedrooms. Totally depersonalized. No projects in progress. No allowances for redecorating or for restoring broken systems to their function. No saunas, bowling alleys, trapezes, or mosh pits.

However when we're looking for a home we enjoy finding a trash pit with good bones. The sellers are desperate and we know how to use sweat equity to realize the home's potential. But that makes us part of the 1% lowballers...

 

[cute fuzzy bunny]

CFB and HGTV have taught me that 99% of prospective homebuyers can't handle reality, and the other 1% will drive you nuts while they lowball you.

Ayuh, its the truth. I've put pretty nice houses up for sale that needed work at prices well below market, factoring in the work they needed. Wouldnt sell. People wouldnt even look twice at a house that just needed carpet and paint. Spend $10k on the carpet and paint, mark the price up 40k, voila it sells.

Whats wacky is half the time the people move in and rip up the new carpet and repaint to suit themselves.

But if its isnt neutral and new, it doesnt sell as well, or for a rational price.

I have an eye towards resale. I wont buy bargain properties that front on a main road, are corner lots with most of the land in the "front yards", or places that have sales "oddities" like <3 bedrooms, <2 bathrooms, no tub in the master bath, etc.

You oughta pick a house that suits you and make it your own. But be aware that you might be overpaying on the buy side or eating it on the sell side. Or taking a lot longer to sell and having to deal with a quirky buyer that happens to like the same stuff you do.

Last 3 houses I sold I spent months to years getting the way I wanted them, then spent a month or two on the sell side pushing it back to neutral and standard.

 

[justin]

When you buy a house, is your decision influenced by resale? In what ways?

If I'm buying a place to live there "forever" (ie - 20 years or more), then I don't really care much about resale value. That's mostly a financial decision (think about the present value of a payment 20 years in the future with a significant discount rate).

If I were to plan on moving in a more typical 3-5 years, then I would probably not buy something knowing it would be difficult to resale. Unless I am getting a significant discount on the purchase price. In which case, come time to sell, I can expect to lower the asking price sufficiently in order to entice a non-choosy customer to buy.

The fair market value of a house is ultimately based upon what a willing buyer is willing to pay. Lower the price enough and you will find a bunch of willing buyers. The key is not overpaying for an undesirable house in the first place, and having realistic expectations when you begin marketing your undesirable house.

A lot of this decision is driven by your view on the question "what is a house?". I happen to view a house as a roof over my head and a place to live. It pays me imputed rent (I can forgo renting out a different residence). In a house-purchasing decision, I'm primarily motivated by a desire to maximize my housing value per dollar. From my point of view, why would I pay an extra $50,000 or $100,000 to purchase an equivalent house with enhanced resale value but minimal provision of extra "housing" for me and my family?

Some folks (most folks?) view houses as investments, and as a result will select houses based on their likelihood of providing a significant return on investment when they resell the house. This kind of person might not focus on identifying what type and how much house they need, but rather what type of house would be most likely to appreciate as much as possible and be most marketable and in demand come selling time.

I've never really bought into the "buy the smallest house in the best neighborhood you can afford" realtor advice. I would do the opposite, since the largest house in the neighborhood would typically provide the best value per square foot or per bedroom.

 

[Moemg]

I bought my current home at a great price because the people had truly awful taste .A totally black den ,tie dyed curtains on 20' windows , cheap linoleum ,wallpaper with leopard print and the cheapest roll up blinds .Because of this these people could not sell a large elevated home on Sarasota Bay .It was my good fortune to look beyond the cosmetic and buy the house at a bargain price .

 

[Khan]

I bought this house to live in; I've been here 29 years.

3 bedrooms, 1.5 bathrooms, no tub (I had it removed), no central air (have a window unit now that I'm retired and home all day), radiators for heat, I have removed all the curtains and some of the carpeting, slowly converting the backyard to ground cover and native wildflowers.

Reasons I bought it: blue collar neighborhood with clotheslines, vegetable gardens, dandelions in the lawns, and pickup trucks in the driveways.

I have spent money over the years replacing/redoing roof/windows/doors/plumbing/wiring (often hiring neighbors and their relatives).

When I redid the kitchen and bathroom I had to tell each level of contractor that 'yes I really want it done that way'.

If I give the house away if/when I move, I'll consider it coming out ahead when factoring in all I've not spent on keeping up with the Jones's and their McMansion.

Am I officially an curmudgeon?

 

[travelover]

.......... Am I officially an curmudgeon?

I'd vote yes, but from a cumulative average of other recent posts...

 

[kcowan]

We have always bought fixers at a discount because we wanted to personalize them anyway. We have made good money over the years because the personalization was usually making it more valuable: kitchen and bathroom remodelling, tearing out ugly things.

OTOH we have friends (2 adults and a cat) who converted their 2BR bungalow to 1BR with a fantastic bathroom with giant shower for two and a jacuzzi tub. The house is for their pleasure and they will leave it feet first.

 

[WM]

We bought our current house with an eye to re-selling it, since we know we will only be here 3 years and we knew we wouldn't want to keep it.

We bought a smaller, older, lower-priced house with minor cosmetic issues (personal preference).

Resale considerations included:

We're in the school district with the best reputation (even though no kids)
3 bedrooms (more than we need)
1.5 baths (would have preferred 2 for resale, but 1 is enough for us)

The entire interior needed repainted, and we did it in off-white - fine for us but might have done something different if we weren't going to worry about selling it. Carpet will also have to be replaced while we're here, and it's going to be very neutral for the same reason.

We speculate about maybe moving back to this area someday, but if we do it will be in an older, more interesting part of town and it will likely be a smaller place. At that point, we're not going to care so much about resale and we'll make it what we want for ourselves.

 

[kaudrey]

When I bought my first townhouse, the hallway walls were pink. It was awful. I bought it anyway and the first thing I did was paint them beige.

When I was selling it, many potential sellers thought the main level wasn't inviting because the hallway when you walked it was very dark (the place didn't have a lot of windows). It had never occurred to me.

You can't please everyone. I plan to be in my current place for a while (8 years already), and I have several rooms with dark/interesting paint on the walls. I hope whoever buys it likes the colors, because I don't want to repaint! It looks cool the way it is!

 

[Rich_by_the_Bay]

Things like crown molding, brick, solid construction, higher ceilings, and quality systems and old well-maintained wood floors make me happy. I'm willing to pay for them, and probably come out OK on resale. I'd rather save on other items, including cars.

We haven't lived in mansions or head-turner type homes but the feel of our houses has always been important to us (beyond pure decorating). It's our nest, and it feels really good to come home to. We could more easily downsize than down-grade.

 

[Sandy]

With kids, the issues shift - number of bedrooms and enough space are critical, but school zones were the first consideration. We wouldn't look at homes in certain areas because of this (there were many that were more affordable, closer for less commute, etc).

The house we bought was spec, without any real landscaping (a couple of spiney bushes in the front), awful wallpaper in kitchen and baths, and some choppy designs. The exact same house on the other side of the neighborhood had sold 6 months earlier for about 25% more fully landscaped, but with the same choppy interior. (This was in 1999, well before the recent price run up). DH (mostly) and I hand cleared the yard and have landscaped. We also did some significant remodeling pulling out crappy material and design to a much improved look and flow.

These changes have improved the resale value, but we also get the enjoyment of a nicer place to live. We couldn't afford to buy our own house now.

 

[happy2bretired]

When we built our small 1300+ square foot house I think we built it just for ourselves but with an eye for future resale value. We selected a lot on a cul de sac, close to an elementary school and fairly close to a major city street on the outskirts of town. Been here now for 8 years and that major street is just now being commercialized. So, within the next year I will be close to a state of the art grocery store and other businesses, that I hope will include a coffee shop. Looks like my neighborhood will be a walkable one soon.

Since I only have 2 bedrooms on the main floor and a small house, if I ever decide to sell it, I hope it would be apealing to both new home buyers or retirees. I would repaint and recarpet the rooms if needed. I don't think I would do much more than that unless I decided that I wanted new countertops in the kitchen maybe a few years before I sold it. I would want to enjoy the new countertops awhile before selling...not just replacing them for the purpose of selling the house.

 

[cute fuzzy bunny]

If I'm buying a place to live there "forever" (ie - 20 years or more), then I don't really care much about resale value.

Forever gets pretty short sometimes. I moved into my last house and planned to live there forever, so I did an awful lot of little things to it with an eye towards a 20-30+ year stay.

Then I got married, had a son, and needed less crime, a better community for kids and better schools.

I think you hit home inflection points when you marry, have kids, retire early, and perhaps when you hit old age. If you buy a single story house with enough bedrooms and bathrooms, and no steep inclines or high roofs...you might get through all these inflections with the same house. But that may not suit people until they're forced into a change.

 

[W2R]

Forever gets pretty short sometimes. I moved into my last house and planned to live there forever, so I did an awful lot of little things to it with an eye towards a 20-30+ year stay.

Then I got married, had a son, and needed less crime, a better community for kids and better schools.

I think you hit home inflection points when you marry, have kids, retire early, and perhaps when you hit old age. If you buy a single story house with enough bedrooms and bathrooms, and no steep inclines or high roofs...you might get through all these inflections with the same house. But that may not suit people until they're forced into a change.

Another inflection point might be a "disaster of Biblical proportions". I love my present house and honestly, I had planned to live in it until I drew my last dying breath. You never know what life may bring!

On the other hand, if the market doesn't improve in a couple of years, then maybe I'll be here forever anyway.