At what point do you make money on a home sale? The obvious answer is “when you sell,” as the closing check with plenty of 0’s will demonstrate. But in reality, you really make your money on a home when you first buy it, as that’s the time you decide on a host of factors and characteristics that will then determine if the house appreciates in value, and how much. So if the best time to make money on real estate is when you buy, what should home buyers look for when they’re out shopping for houses? Here are 10 factors that ensure you “buy right” and make the most money on your house long-term.
- Location x3
You’ve heard it a million times, but where your home is can help your value a lot more than what it is. To pin down what we mean by a good location, look for a quality neighborhood above all else. Homes in nice, safe, quiet, family-oriented neighborhoods always do well when it comes time to sell. Look for signs of pride of ownership, like well-maintained lawns, freshly painted homes, decorated front porches, and improvements all hint that it’s the kind of neighborhood where owners and renters care about maintaining the aesthetics – and values – of their homes. If you can buy in a mature high-end or affluent community, you’re almost certain to make money as the values steadily rise over the years. While inadvertently being too close to a prison, railroad tracks, or a waste facility may inhibit your values no matter how nice your home is.
- Schools, parks, and other amenities
The quality of public schools in your area is one of the biggest factors in stabilizing future values. Young families and concerned parents will always want to move there, and that unwavering demand will help support the real estate values.
Neighborhoods with parks, jogging trails, sports fields and other outdoor recreation areas that are well kept definitely will be attractive to future homebuyers.
Also, look for nearby amenities like grocery stores, gyms, doctor’s offices and hospitals, hair salons, banks, and gas stations in the vicinity? Drive around in a one-mile radius from your prospective home to check out the restaurants, pubs, cafes, coffee shops, boutiques, art galleries, and other establishments that add a lot of character and enjoyment to a neighborhood. Mom and pop eateries and businesses, especially, are a great sign that people are fully vested in the community.
- Natural light
Switching from the neighborhood to the actual aesthetics of the home, look for a house that gets good natural light. It’s flattering to any property and conveys a sense of lightness, positivity, and open space far more than switching on a light bulb can ever do. When it’s time for future buyers to walk through your listing and form a first impression, homes with good natural light will always have a leg up.
- High ceilings
High ceilings always make a home feel roomy, airy, and inviting, no matter what style or square footage the home. Hiring contractors to raise your ceilings after-the-fact is extremely expensive – or impossible, so focus you should look for a home with ceilings at least 6 inches or even one foot taller than standard building code in the area. Conversely, stay away from homes that look or feel “pinched” or cramped by lower ceilings.
- Good square footage (but not the biggest)
Homebuyers always look for large, roomy homes. What range of square footage is considered large depends on the neighborhood, but it’s never a good idea to buy one of the smallest homes in a neighborhood, as the values won’t rise like it should. You can easily remodel and upgrade the condition of a house, but adding square footage is so costly and time consuming, it’s usually not worth it.
It’s worth noting that while good square footage is still at a premium, buyers have pulled back from their quest for “mega houses” and McMansions that had cavernous square footage, during the real estate boom. In fact, the average square footage of homes sold and new construction have both receded slightly, as buyers focus on the floor plan, amenities, outdoor living, and the neighborhood over size alone.
- Flowing, open floor plan
It’s not enough to have a sizable home, but it should be planned and laid out correctly. Single story homes with open, flowing floor plans and great room concepts always do really well when it comes to resale value. You also should try to buy a home with at least 3 bedrooms and at least 2 full baths, because any smaller than that and it won’t be attractive to families and young couples who are buying and looking to grow into it. The exception to this is buying in older neighborhoods where most of the homes only have two bedrooms and one bath, for example.
- Plenty of comparable homes in the area
Buying a home that stands out or is unique in your area might seem like a good idea when you buy (especially since the price tag is probably lower than other more “standard” listings in the neighborhood,) but it can seriously hamper your future values. Whether it’s too small, too big, or a different type of construction, it will have little or no comparable properties to boost its value over the years. You never want the biggest or the smallest home in the neighborhood, and this is also true for funky or unique construction, so instead look for a home that has plenty of comparables when an appraiser does their valuation.
- Hardwood floors
Hardwood floors never go out of fashion, while carpet wears out and gets dingy and tile in the whole house looks too cold and antiseptic. In fact, the older they get, the more hardwood floors speak to the character of the house, and they’re easy to refresh and even recolor before moving in – or selling.
- Kitchens and bathrooms
No matter what design trends come and go, nice, open, and functional kitchens are always a plus – and the focal point of the home when you go to sell. Bathrooms are next on the list. Focus on the layout, space, and functionality of the kitchen but don’t fixate too much on things like appliances and countertops, which can be easily swapped out in the future.
- Outdoor living spaces
Homes with nice outdoor and natural living experiences always sell well. Your home has to have a huge yard, but nice sitting areas, old-fashioned wrap-around porches, outdoor kitchen, or any number of areas to entertain and spend time with family and friends. However, you may not want to put serious thought into buying a home with a swimming pool, built in hot tube or sports courts, which data shows do not increase the value of the home and actually may turn off a certain portion of buyers who don’t want to deal with the maintenance, liability, or expense – or just plain won’t use them.