Home Resale Value Factors

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I am looking to buy a new house and I would like to know what qualities make for a good home resale value?


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The resale value of a house depends on many, many factors, some of which you can do something about, and some of which you can’t. I’ll address both types of factors, starting with those you can’t do anything about (typically they factor most heavily in the value).

Generally, the most important factor in the value of a home is its location. A good location is, to a certain extent is subjective, but common indicators of a good location include good schools, a safe and clean surrounding area, and proximity to shopping and transportation lines. Even within a particular locale, some locations are better than others. For example, on the same street, a house in the middle of the street will be have a higher value than the one on the corner and the house in a cul-de-sac will have an even higher value than the one in the middle of the street. Houses on quieter, smaller streets are likely to have higher values than houses on neighborhood thoroughfares.

The resale value of your home, obviously, depends on the market. The hotter the market, the more valuable your home. Market, to a certain extent, is a function of location. An obvious and easy example is that homes in California are far more valuable than homes in Iowa – there is less land left to develop (tighter inventory, even though there are more houses overall) and more people who want to live there.

The demographics of the area can also play a big part in the resale value of the home. If the area is made up of mostly young professionals and it is growing and expanding, then it may indicate what the area will be like in the future. On the other hand, if the area houses mostly baby boomers then the homes may be more accessible to an older crowd.

Location, market, and demographics are all out of your control, but the characteristics of your house are not, and having a home with desirable characteristics can usually affect the resale value of your home by a couple thousand dollars. There are two things to keep in mind here: 1) first impressions matter; and 2) you typically don’t get out the entire amount that you put into improvements.

Let me address the second thing first. Homeowners rarely recover the cost of

improvements that they make to their homes. For example, the most valuable improvements include kitchen and bathroom remodels (or additions). Typically, a homeowner can expect to see an 85 to 95 percent return on the money expended to make the remodel. Pools, popular improvements, are horrible investments. Even in the best areas, they only return about 40% of the investment.

Given this, the best idea is to focus on the first thing I mentioned: making a good first impression. Making a good first impression can be very cheap, so it is easier to recover your money and enhance the resale value of your home. The easiest way to make a good first impression is to make regular repairs to your home and do a deep cleaning at least twice a year. Another easy way to enhance the resale value is to improve the landscaping of your front yard. This is the classic curb appeal. Don’t just stop at landscaping. Consider a new front door and lighting and look for ways to make the front yard a usable space. The thing to keep in mind here is that the more valuable your house looks, the more valuable it will be.

Above all, remember that any increase in value is usually a function of appreciation as much as it is a function of making an improvement, so if you want the most

resale value, make the improvements to your home and then wait.

Answered about 8 years ago
Anonymous

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