How Do You Know If A Home Has "Good" Resale Value

Dated: April 7 2023

Views: 395


Whenever a homebuyer is in househunting mode, it's a frenzy of pouring over listing after listing trying to find that one that will work.  Your Realtor is sending you properties daily; you're on Zillow, and googling "homes for sale in [blank]" over and over...until finally, you find one that could be "the one".

So, how do you know if that prospective "one" is the "right one"?  How do you know if that home will maintain or gain value over time?

I think the best thing to think about is long-term vs short-term ownership.  If you are keeping a home for 30 years, then yes, it's pretty much a guarantee that your home will increase in value over time, even if it's simply adjusted by inflation alone.

For short-term homeownership; I've been trained to say that the minimum time to keep a home to break even is about 5 years.  I disagree wholeheartedly with that.  I had a client who bought a home, then 9 months later got separated from his partner, and I sold it.  He not only broke even, but made a few bucks on it too.  I had another client that bought a house and I sold it two years later and made $70,000.  There are plenty of examples out there with similar or better outcomes.

But how do these outcomes differ from one house to another you may ask?  I say that it comes down to understanding how and why homes sell.  Here are my 5 factors (from greatest to least importance):

1.  Location.  It's the first rule of real estate - "location, location, location".  This cannot be understated.  A "good," or a better term would be "desireable" location may have some of the following;

  • Desireable School Zones.  Schools that are highly regarded by parents, has high teacher to student ratio; students score above the median on state academic tests.
  • Close to Amenities.  This is in proximity to shopping, healthcare facilities, mass transit, parks, restaurants, or leisure activities.
  • Water.  No matter if it's an ocean, lake, river, pond, or creek; many human beings like to live near bodies of water.  Many of us hard-wired to desire it..could be an evolutionary trait, or because it's just essential to life.  Many cultures around the world even associate water with good fortune or luck.
  • Neighborhood.  This doesn't simply mean "big houses".  There are plenty of distressed neighborhoods that have "big houses" in them.  I think I can say we have all seen examples of that.  But primarily what you want to see is that homeowners are maintaining their homes and keeping their yards manicured and free from trash and debris [pride of ownership].
  • Safety.  Let's face it, crime happens everywhere; however, less is always better.  That's why areas with lower crime incidents tend to be more desireable than areas that have higher ones.  Nobody wants to live in an area where they don't feel safe, and are willing to pay for that security.

2.  Condition.  It's my second rule of real estate.  If a home looks like crap, feels like crap, smells like crap, and operates like crap....then what is the house to the buyer?  A home in desirable condition may have some of the following attributes:

  • Structural.  Is the crawl space free of wood destroying insects or fungus?  Is the slab free of major cracking? Are there any damaged piers or floor joists?  Any damaged or defective roof trusses or assoicated components?  Are there cracks going up the exterior brick wall?  Are there cracks going up the drywall in the house? 
  • Mechanical.  If the HVAC system is more than 15 years old, then it may need to be replaced.  If the water heater is over 10 years old, then it may need to be replaced.  If the appliances are more than 10 years old, then they may need to be replaced.
  • Electrical.  Is there an outdated electrical panel; are power outlets not grounded; are there no GFCI protections near water sources; does the home have aluminum branch wiring?  Are there any burt outlets?  Are lights flickering?
  • Plumbing.  Are there any leaks under sinks, in showers, or under toilets?  Do sinks and tubs drain slowly? Does the home smell like farts or cooked cabbage? Are ther polybutylene pipes in the house?
  • Exterior.  Is the roof more than 20 years old if it's three tab; 30 years if architectural shingle?  Then it may be time for a new roof.  Does the siding have holes in it? Is the yard's curb appeal look good?  Does it have a fence?  Most people desire a fence, espcially those with children and pets.
  • Cosmetic.  Is the home dated?  If the interior is dated, it will be less desireable; unless the property is a time capsule and appeals to someone with specific niche tastes.  For example, someone may have a lot of mid century modern furniture and a particular dated space may compliment what they own.

3.  Layout.  This can be subjective, but generally layout is the "flow" of the home.  A home with a good "flow" can have a positive effect on resale value.  Generally, layout includes:

  • Bedrooms.  Are all the bedrooms small?  The primary or master bedroom should at least be able to accomodate a king sized bed, a dresser and night stand.  If not, then the room may be considered "small" by most.
  • Storage.  Is there a lack of closet space? No pantry in the kitchen? No attic space to store holiday decorations?  
  • Garage.  No garage means no place to store your vehicle, bicylces or toys; No place for your personal belongings; and no place to have personal workshop.  Some people use the garage as their personal gym or entertainment space.
  • Kitchen.  Lack of cabinet and counter space, overall condition of the space.
  • Bathroom.  2+ bathrooms are always better than 1 or 1 1/2 bathrooms.  Updated bathrooms are more desireable than dated ones.
  • Openness.  Many people these days like and open kitchen and living space and less peeople like compartmentalized living spaces.
  • Small Living Rooms.  People's televisions are getting bigger and bigger.  No defined space for a big screen TV turns buyers away.  The other side is lack of space for furniture.  I have pesonally witnessed buyers walking away from a home becaue the space will not fit their couch.
  • Ceiling Height.  More people prefer ceilings greater than 8 feet.
  • Stairs.  If a home has stairs than it typically will be less desireable for those who have difficulty navigating stairs such as elderly or people with injuries or disabilities.  In addition, the location of the stairs could turn a buyer away such as the staircase in front of the main door.  In some cultures, this may be considered bad Feng Shui.
  • Square Feet.  The less square feet a home has, the less desireable it is.  People like space.  

4.  Price.  This factor is a sum of the first three.  If a home has a top notch location, is in amazing condition, and has a phenomenal layout; well, then the price will reflect it.  If a home has the opposite, then it should be surmised that the home will not garner the same desireability, and thus, less of the price.

5.  Marketing.  How many people know a home is for sale?  Can an agent quantify those metrics?  There are various digital advertising platforms that help us agents market properties.  Even the old school method of open houses, flyers, signs, and door knocking still works. 

No matter the method, the important point of it all is to be consistent.  And as agents, we should always put consistent effort in getting our listings sold.  If one method is not yielding results, then we have to try something new and mix it up.  

Marketing may be the single biggest factor an agent can control when selling a property.  Think about it.  We can't change location.  Only the homeowner can change the layout if they're willing to fork over thousands to a contractor.  But most of the time, this is not feasible.

If location and layout are pretty much fixed, then price is the only other factor that can be controlled, and that's up to the Seller.  Marketing is for the agent.

So, there you have it.  Homes sell based on location, condition, layout, price and who knows about it (marketing).  So if you ask yourself if a home you're about to buy has a good resale value - think back to the 5 factors.

Until next time.  Thanks for reading.  And, if you're ready to buy or sell or have a conversation about real estate - text me at 757-800-2674 or email me.

Blog author image

Robert Keilman

I earned my real estate license in 2018 while still on active duty in the U.S. Navy.  What started as a part-time job quickly became my passion, and subsequently became my full-time career in 201....

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