Seven Potential Re-sale Problems

Your home selection is a very personal and emotional decision, and that is how it should be. You should tap into your emotional knowledge when choosing a home. Your home will be a place where you and your family can enjoy life and feel safe and secure. Many personal factors will influence your decision.

However, at some point in the future you may need to re-sell the home. Most people would like to receive at least 4% annual appreciation on the sales price of their home. Now is the time to look ahead and consider any possible sales objections that you may encounter. The value of your home as an investment is directly related to its marketability. In order for your home to sell at the highest price possible for the market it must avoid re-sale issues.

The issues noted below are not to be thought of as deal killers. The home you have selected may have some defects, yet meet your needs in many important ways. Certainly, no home will be perfect. However, your purchase decision should be supported by a careful evaluation.

Home flippers look for homes with marketing problems such as these. Often priced below market, these homes are perfect for their remodeling solutions. You, too, may think creatively when considering a home. With good design help, many problems can be corrected or mitigated. Here are 7 potential re-sale problems:

1. Lot Problems:

Unusual Easements or Restrictions

If unusual easements or restrictions were not disclosed up front, you may not be aware of them until you see the survey and title work. If you discover these, I suggest that you take a step back, and consider whether you will accept an unusual easement or restriction on your use of the property. Some examples: neighbors may cross the property, major pipelines cross property, or pets are prohibited.

Very Small Yard

If a home has much less yard area than others in the neighborhood, buyers tend to eliminate this choice. A steep slope may make the grounds difficult to use and maintain. Yards that have been terraced or landscaped may be exceptions. Compare your property to the yards offered by competing homes.

Commercial View

Homes in suburban areas that view office buildings or retail centers are less attractive to buyers. Buyers choose suburban neighborhoods for their concentration of single family homes, separated from commercial areas. This may not be a problem in more urban areas.

Flag Lot

These are lots with a long narrow strip leading to the area where the house is placed. Your home will have almost no street frontage, and there may be a building in front of your home. A flag lot in a country setting with a long driveway leading to a large tract may be an exception to the rule. In a subdivision of homes with road frontage, buyers will avoid this type of lot.

2. Common Objections:

High Tension Wires

The general reaction by buyers to high tension wires crossing near the lot is to simply eliminate the choice.

Steep Driveway

I have shown many buyers who will not get out of the car when the driveway is extra steep.

Busy Street

The noise from a busy street is a turn-off to many buyers. This is more of a problem if the busy street is in front of the house, and includes the visual presence of traffic.

Too Exposed

Most buyers in all neighborhoods want a certain degree of privacy in the back yard. If the building behind your home looks down on your backyard or into your family room, this will be a sales objection. This can be mitigated by trees or screening.

3. Neighborhood Concerns:

Declining Values

If you perceive the neighborhood to be declining, this is a must to avoid. Choose areas that show pride in ownership. However, if you see tear downs and new construction, the neighborhood may be entering a renewal period, and could be a good risk.

Safety or Security Problems

If you sense that there are security problems - drug trafficking, burglaries, or safety problems for your children, take a step back and look at the facts and data on these issues before buying. These kind of problems will turn away buyers fast.

4. Market Issues:

Seasonal or Limited Market

Some homes have a limited market - a vacation area, a primarily student market, or an age restricted subdivision. This may suit your needs, but keep in mind that your re-sale will be limited to these types of buyers.

Remote Location

In most cities, areas that are closer to downtown tend to have a larger buyer pool than homes located in remote areas. However, you may choose to trade the privacy and setting of a country home with the resale potential.

No Comparable Sales

This indicates a possible re-sale problem. The home may be very unusual compared to homes around it, or the market may be slow. Understand the underlying reason for few or no comparable sales.

Extended Marketing Time

Has the home that you are considering been on the market a long time? Was the price simply set too high? Has the market been slow? Or, is there a problem with the house that you will need to correct?

Oversupply of Homes

This is a fundamental re-sale problem. A common source of excess supply is from new homebuilders in the area. Or, sales may be slowed by an economic recession or high interest rates. The oversupply of homes on the market may be a temporary situation.

5. Non-conforming Styles:

Lacks a Typical Amenity

In an area where nearly all homes are on the golf course, or have a pool, or include a garage, buyers will tend to avoid homes that lack these features. In an area of mostly older buyers, a home with the master bedroom upstairs may have trouble selling. Look carefully at what is generally offered in a given area.

Unusual Architecture

Homes that do not fit in to the neighborhood may have trouble selling. For example, the urban modern style may be a good fit in older eclectic areas, but would be hard to sell a uniform suburban neighborhood.

6. Inspection Questions:

Water Drainage Problems

Poor water drainage may be a serious and costly remediation problem. In addition to habitability problems caused by water penetration, excessive changes in the moisture content of soils can cause structural problems. Talk with an expert about improving the drainage around the house, and evaluate any previous damage caused by flooding of the interior or water standing around the house. Be sure that you have all the facts on the table and an improvement plan ready.

Structural Defects

Structural defects have an underlying cause. They may be due to loose fill on the lot, clay soil, drainage issues, or poor construction. It is crucial to know the source of the problem, and the cost to repair, before taking on a house with structural problems.

Inspection Issues

Excessive repairs noted on your inspection report indicate that the house was not maintained or was poorly constructed. Be prepared for some serious work on the house. All exterior sidings, including stucco, should be inspected carefully. An incorrect application may have water damage or mold behind it. A mold infestation may be expensive to remove. Be prepared to document your repairs in order to show a future buyer that the problems have been completely solved. These issues tend to have some stigma attached.

Insurance Claims

It is important to know the facts about a previous insurance claim. If it was due to a fire or flooding problem, you should have full disclosure. Large insurance claims are a red flag, and may result in difficulty in obtaining insurance on the home. Many homes have had repairs covered by insurance, such as hail damage, and these are not a re-sale problem.

7. Improvements - Too Much or Too Little:

Costly Improvements

You may not be able to recoup the cost of certain improvements to your home. Some examples may be imported fixtures, unusual craftsmanship, exotic woods, European appliances, non-native plants, hand decorated walls, etc. If these finishes are similar to locally available materials, they may not have a market value equal to their cost. In general, swimming pools do not contribute the full amount of their cost in the value of the home.

Over Improved

Homes that are over improved for the area, or have excess acreage, often have a difficult time recouping the additional cost. Most people feel safer buying one of the cheaper houses in the neighborhood.

Non Functional Floor Plan

Floor plans that make living in the home difficult will turn away buyers. Excessive level changes, rooms that are out of proportion, poor access to the backyard, low ceilings, few windows, and other layout issues will result in a re-sale problem. This may be an opportunity to take down walls, add windows and doors, and make creative changes to improve the functionality and value of a house. Design skill and a fairly high budget will be necessary.

Out Dated Finishes

Most homes have some outdated finishes - from needing freshening up, to a complete makeover. This is where design skill and perseverance can completely transform a house. If you are new to remodeling, consider your budget carefully. Often the work can get quite extensive and tends to grow as the project develops.

Although your emotional level response is a strong factor in your choice of a home, it is important to step back and evaluate your decision. A better decision is made when all facts are on the table. The quality of your investment as well as your enjoyment of the home is at stake.