The seemingly-simple word “buyer” is the label commonly applied to those who aim to own real estate after completing a set of often-complex home-buying tasks. The problem is that this simple label can lull buyers into believing that home buying is simple. That’s where the trouble starts.
The simple word “buyer” under-estimates the full significance and scope of professional perspectives that home buyers must adopt to achieve goals and protect outcomes. That is, to end up owning the home of their dreams, not their nightmares.
Buyers face a range of challenges that start with the type of real estate involved. Market value as well as legal and financial issues vary with the type of ownership and the style of structure. For instance, detached houses top the list of quality and quantity of ownership rights and benefits purchased; cooperative and other shared-ownership units are at the other end of the ownership spectrum. Here, we’ll use two categories – “house” and “unit in complex” – to demonstrate how professional perspectives may vary at either end of that range:
- House: “Buy the least house on the best street” is the buying perspective that brings market value in focus. This way, each improvement made to your home increases its value. Plus, improvements that other property owners make increase the value of your real estate and that for the street.
- Unit in Complex: In high rises, market value goes up with height and quality of views. Areas where power outages are common, lower floors may hold benefits. Penthouses carry special premiums, but if microwave towers and other electromagnetic equipment are located on the same level or above these units, there may be noise and health issues to consider.
The list of professional perspectives below offers a glimpse into the challenges involved in home buying. Buyers are not trained to adopt these professional assessments, but without them buyers may shortchange themselves:
1. What an Architect or Contractor may consider….
A. House:
- How is the house positioned on the lot and what percentage of the lot represents buildable area?
- What expansion could be possible?[small bullet] Is the house compatible with others in the neighborhood, i.e. style, size, landscaping…or will investment be necessary to gain the full value associated with the neighborhood?
- How would the house and garden be affected if major additions were constructed on adjacent properties?
B. Unit in Complex:
- Where is the unit positioned in the complex relative to amenities, exits, and “noise makers” like garage and delivery trucks?
- What is the policy of the management corporation regarding unit renovations?
- Regarding resale value and practical renovation budgets, how highly is the complex valued by its prime target – families, adults only…?
- What development or redevelopment is planned for abutting or near properties, and for the complex itself?
2. What a Landscaper may consider…
A. House:
- What condition are the garden and landscaping in and what would it cost be to bring them up to or above standard for the area?
- What improvements to the landscaping and garden amenities would increase market value?
- If there are older trees, what liability do they present and what would the cost of maintenance or removal be?
B. Unit in Complex:
- If this is a new complex, have the grounds and amenities been provided and maintained as promised by the developer?
- What landscaping or garden structures may be added to the terraces and/or garden which are included in the unit?
- What costs for landscaping deficiencies like drainage issues or expenses like large tree maintenance could be added to the unit owner’s monthly fee or assessed as a special charge?
3. What a Financial Advisor or Investor may consider…
A. House:
- What is the history and the projected future of property value appreciation for the property and the area?
- Which features of the property and the area most strongly contribute to appreciating value, i.e. parking, storage, schools, environmental features like parks…?
- How long before the property could be resold to recover the cost of buying and reselling?
B. Unit in Complex:
- What is the track record of the management corporation regarding raising monthly fees, assigning special fees, timely completion of repairs, high-standard maintenance, and modernization to preserve and enhance property value?
- What changes to the area or to the resident population could bring down property values?
- How favorably do mortgage lenders view the security of the complex when mortgaging a unit?
4. What an HVAC Professional may considers…
A. House:
- How old are the heating and cooling systems and, based on how well they have been maintained, how long will they continue to work cost-effectively?
- Have all renovations been undertaken by reputable, licensed professionals with work permits or has”do it yourself” been the approach?
B. Unit in Complex:
- How old are the heating and cooling systems for the unit and the common areas, and, based on how well systems have been maintained, how long before replacement and modernization are necessary?
- What improvements to bathrooms, kitchen, and HVAC are necessary and which could easily be added to up-grade the unit?
5. What an Lawyer may consider…
A. House:
- Are there potential boundary disputes with neighbors or is there an existing, up-to-date survey which verifies buildings are within property lines, i.e. no encroachments?
- Is there any sign the property has been used as a “grow op” house for growing marijuana which could lead to issues of mold that may render the property uninhabitable?
- Are there any housing, municipal, or business developments in the works or planned for the immediate area around the property or in the neighborhood that would adversely affect use and enjoyment of the property or its market value?
B. Unit in Complex:
- Is the complex in sound financial and legal shape or are there issues or lawsuits pending against the complex or the management corporation?
- What is the legal definition of “unit” and all that is included with it and what does “common element” include?
- Are resident owners truly and fairly represented on management committees and by the management corporation, so unit owners have clear say regarding decisions involving maintenance and modernization of the complex which, in turn, affect property value?
7. What a real estate professional considers…
House and Unit in Complex:
- Real estate professionals consider all of the above questions and more from the buyer’s point of view when the buyer expresses a particular interest, stresses a related goal, or voices a specific concern. For instance, “location, location, location” is still the key value criterion, so how does it materialize in the home search?
For example, in some areas, one side or end of a street may have higher value when that street represents a school boundary. Homes on the side of the street which qualifies students for the more popular school may carry added value.
- What does comparative market analysis of compatible past sales, current listings, and past expired listings determine about the market value of the property regardless of clever staging and of multiple offer pressure?
- Ask your real estate professional what key questions they address to serve your specific needs in your search for a uniquely-perfect home.
This article is the third and final installment in our Buyer Be Aware Series. These three though-provoking views on home buying are designed to sharpen your senses and strengthen your negotiation position:
What would you like to learn more about? PJ Wade would like to hear your point of view: This email address is being protected from spambots. You need JavaScript enabled to view it.
