The adage is, when it comes to Real Estate the most important feature is “LOCATION… LOCATION…LOCATION.” That’s because Location still secures and guarantees your investment. Given the politics of today’s world there will always be fluctuations in the Stock Market and the Real Estate market. However, overall Real Estate can be the most solid investment! Sure it may be great to buy a home in perfect condition that you can just move into. But, it is more important for you to purchase a home in a good location with similar priced homes or with some upscale homes on the block.
Sometimes you may be faced with the choice of purchasing a smaller home that has been completely renovated versus a much larger home that needs updating for a similar price. What should you do in this situation?
There are many couples working today to afford a certain lifestyle, so the idea of renovating can sometimes feel daunting with busy schedules. So if you are going to purchase a turn-key property that does not need work make sure that you are not over-paying, which sometimes can happen in the excitement of the purchase.
Take a step back and evaluate the room sizes, the lot size, taxes and what other homes on the block have been selling for. If the home is situated near other upscale homes or there are new construction homes being erected, this is a good sign and can help solidify your purchase investment but still narrow your resale profit.
Buyers need to be more careful in their purchases. For instance, if you are spending the same dollar amount but there is a house in a much better location surrounded by other higher priced homes, larger lots and interiors but needs a $100,000 worth of renovation, wouldn’t it be smarter to hire a contractor and designer to finish off a house that will give you a much higher rate of return then just breaking even? You can also reap the benefits of living in that larger home.
When investing in real estate you need to analyze and calculate the market carefully to see if your purchase is sound. Will you be able to sell your home for what you paid or can you make a profit? Or do you risk a loss? Everyone wants to enjoy home living as it is still the American Dream. Make sure you are using an experienced Realtor and always ask for references or reviews of their work by buyers or sellers that worked with them.
What is the difference between New Construction and a Home that has been renovated strictly for resale?
With New Construction it is important to know who the builder is and what kind of reputation he may have in the community. Is it someone that has built other homes in the area or is it someone totally new.
What other towns have they built in and what is being said about their work? Generally, you can get references if it is a reputable builder or go the building department of the town where you are purchasing and ask if they have heard about the builder, make sure all permits have been closed. Do your homework. Check with the Better Business Bureau and see if there are any complaints. Check the internet and see if there is any further information that may be posted. In most New Builds you will get a 10 year builders warranty which you should have your attorney review before you make your final purchase.
Recently, we’ve seen many homes being “flipped” and renovated rather quickly by contractors, by Realtors who have turned into contractors, or the public at large that may not have had any previous experience in renovation. To this I say, “Buyer Beware”. Given the vast portfolio of short sales, foreclosures and depressed home values in previous years, houses have been snapped up by many kinds of buyers.
They have been renovated extensively or just enough to make it “pretty enough to sell.” This is attractive to those buyers who want to just move in with their belongings which include first time home buyers or people with very busy schedules. There is nothing wrong with this as long as you can get a warranty for this kind of purchase. I suggest you ask for a whole house warranty for one year. It is enough time to make sure that the house is sound, free of leaks or other issues that can arise. Since all the appliances and bath fittings are generally new or young at the time of purchase you will be covered by the warranty of the manufacturer for those items.
What you are looking for is a warranty on the workmanship of portions of the house that have been newly constructed or updated. It is not enough to just do a home inspection of the property as things may turn up after the purchase. A warranty gives the buyer peace of mind for a year, which is not unreasonable. In most cases you are paying top dollar for this renovation, so don’t be afraid to ask for it.
Nicole Idler is a NJ/NY Associate Broker of Friedberg Properties and actively lists, sells & rents in all of Bergen County. E-mail her with your questions or for all your real estate needs at [email protected] or call 201-906-9338 or 201-894-1234. Call Nicole & make home ownership a reality!! Free Confidential Consultation.
By Nicole Idler
