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.
It's true, too. 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 bargains?
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
