Updated: July 25, 2021
Do you ever hear stories about a friend or a colleague who got a great deal on a house? Do you ever wonder how they do it? Most home buyers overlook some really great homes because they are unable to see a home’s true potential. What your friends and co-workers likely know is how to look past a flaw, or two, or three, in order to score big on a huge purchase.
Here are a few tips that will help you ignore less important distractions that may inhibit your ability to see the true underlying value, when prospecting for a new home. These tips will also help you land a home that will give you more flexibility, when planning and undergoing future renovations. For example, identifying easy and affordable fixes will make a new residence more livable sooner, which in turn will buy you more time to undertake future upgrades.
1. Look Past the Landscaping
According to analysis conducted by Alex X. Niemiera, a professor in Virginia Tech’s Department of Horticulture, a well-landscaped house can sell for 5.5% to 12.7% more. Well the opposite is true. How would you like to pay 10% less on house? Some buyers won’t even go inside a house if it doesn’t have good curb appeal. That means less competition for you and more money in your pocket. If you want to hire a professional to landscape it may run you around $3,219, according to HomeAdvisor.com. However, you can also do it yourself, which could save you thousands.
2. Look Past Clutter
Most people get distracted when there is a lot of clutter. They will pay more attention to all the stuff in the room, versus the actual flow of the room. They will rule out these houses because the buyers cannot visualize themselves and their furniture among all the seller’s personal items. A good tip is to focus instead on bedroom and bathroom count, and total square footage. Remember, unless otherwise agreed upon, the seller must remove all their personal property at close of escrow. You can also consider using virtual staging services that will display the home with the clutter removed, and in its place, more desirable furniture. This type of software is contingent on having sufficient and adequate photos of the property.
3. Leverage the Principle of Progression (Positive Adjacency Effect)
The next two tips have to do with appraisal concepts – the principles of progression and regression. Progression is a theory that states the value of a less expensive house will increase when it is surrounded by more expensive properties. Therefore, it’s good to be adjacent to more valuable homes and desirable neighborhoods. Consider buying next to an area that is already developed or has great schools. As an area develops and becomes more popular, property values go up. The comparable properties that an appraiser may use to value your property may be in a better neighborhood, which will drive your property value upward.
4. Stay Away from the Principle of Regression (Negative Adjacency Effect)
On the other hand, regression theory is the principle that the largest, most expensive home in the neighborhood will go down in value, since the comparable properties are smaller and less expensive. This severely inhibits the property’s ability to increase its price, no matter how many quality improvements you may make. Therefore, it makes more sense to buy the smallest and least attractive house on the block, versus the biggest and most improved house.
5. Stop Looking for a “Unicorn”
Do not look for or wait for the “unicorn”, which is the perfect house for your unique needs, at the right price and location. It doesn’t exist. Finding a perfect property is like finding a perfect spouse. Looking for perfection is a sure way to pass up a great deal. You must be willing to keep an open and creative mind, while being receptive to compromise. You cannot time the market and you cannot just sit on the sidelines, while everyone else is finding great deals. The best way to “find” a unicorn, is to “create” a unicorn over time. Capturing hidden value at the time of purchase gives homeowners valuable flexibility to “customize” your home to fit your unique needs and tastes over time, through future renovation projects.
Natalie Alchadeff is a Real Estate Broker and Owner of the Hero Broker Group affiliated with Keller Williams.
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- Proptech Firms that Enable Homebuyers to Make All Cash Offers
- The Many Benefits of Virtual Staging: Selling, Renovating & Decorating
- Want To Buy A Fixer-Upper, But Lack Funds? Consider A 203K Loan!
- Researching a Neighborhood: Frequently Asked Questions