Before writing an offer, every buyer should have the answer to this question: “Am I getting my money’s worth?” In today’s rapidly rising, sellers’ market, some buyers take false  comfort in the thought that the price they pay today is not really important because the property will be worth more next year.

A  buyer can avoid making this, as well as other, costly mistakes by understanding the basic principles of house buying.

Buy with selling in mind

This is the dictum that supersedes all others. No matter how much you love the house and think you will be there forever, the day may come when you will want to sell. Keep this  thought uppermost in your mind as you consider the following points.

Location is the key determinant of value

Although a cliché, nevertheless, it is my prime advice: buy location first, house second. Some buyers think they can do an end-run around the system by buying in a “coming” area. This is usually wishful thinking. With few exceptions, top areas stay tops and less desirable stretches tend to remain in that category.

Every property has a maximum value

Although subjective, this is true for any given moment in time. Obviously, if the property was fully marketed, its sales price indicates the market value on that date. What it doesn’t tell you, however, is how much that home might sell for in a different market.

Learn from history. An experienced, local Realtor, familiar with past trends in the area, can be invaluable in helping you understand market tendencies, past, present and future, relative to prices.

Condition counts

What seems to be a common sense concept is often disregarded by buyers, i.e., a house in excellent condition has greater value than if it has substantial problems. I can think of two types of situations where a buyer may ignore the obvious to his detriment.

The first is when he purchases a home with problems “As Is” for what seems like an attractive price. The second occurs when there are multiple offers and the buyer agrees to be responsible for pest control, drainage or other items in order to get his offer accepted.

Without a complete understanding of the financial and emotional costs before committing to a home, a buyer may end up in an unenviable situation. Despite the competitive nature of a sellers’ market, a buyer does have choices.

If you don’t like it, they won’t like it

What is a negative feature to you, will probably be an undesirable one to others. The greater the number of negatives, the more difficult the sale and the lower the selling price.

Some buyers are not conscious of the impact of these deficiencies, or they may ignore them,  thinking they will “fix them later.” The unexpected expense of doing so, or the lack of time, may intervene. When it is their turn to sell, the negatives are still there.

Size. Homes under 1000 sq. ft., particularly those with only one bedroom, are less in demand. I have been involved with two recent sales in good areas that serve as examples.

One is a one-bedroom, 600 sq. ft. house with curb appeal on a lovely, wooded lot. The seller originally paid $200,000 ($333 a sq. ft.) in 1990 and sold it for less than 80 percent of that amount.

The second, a two-bedroom under 900 sq. ft.,  was purchased for $229,000 in 1990 and sold for a lot less. This house has an additional room (with outside access only)  which helps, but still creates objections.

In both cases, the sellers had invested money to improve the properties, so their losses were even greater than the differences between their buying and selling prices.

Nonfunctional floor plan. This could encompass anything from a “railroad car” type layout to one where you must go through the kitchen to get to the master bedroom.

Also included could be a customized job suited specifically for one person. I have seen many examples: the rumpus room converted to a bowling alley (done 25 years ago); the garage made into a family room, bedroom or shop; the entire backyard taken up with a swimming pool. Unorthodox floor plans and specialized rooms/areas have limited appeal.

Ill-advised renovations. Replacing wood sash windows with aluminum in a traditional style house, and covering hardwood flooring with linoleum or tile fit into this category. They detract from the charm and character of the home.

Unattractive or poorly maintained properties nearby. Even in the best neighborhoods, surrounding properties, for better or worse, will have an impact on yours.

Too many steps. Level-in is considered a plus; too many steps are a detriment. The exact number is subjective. You may find the house magnetic and disregard its 60 steps up, but the reality of making that trek could change your thinking over time.

Outside living. Many houses have only steep, unusable up or downslope lots. A deck is sufficient, even preferable, for some people. Most buyers, however,  want an outside area, preferably level, where they can relax, provide a play area for their children, or garden.

Privacy. We all like our own space. Properties surrounded by other buildings that impede their privacy are less popular.

Proximity to a… Although convenient if you have children who will attend the school, being across from or adjacent to a school or active public park is not considered a plus. The concern here is noise, traffic and safety. This is also true for homes on busy, main streets.

Earthquake areas. Properties located in what are commonly called Special Studies Zones require special disclosures and may be subject to certain building and insurance restrictions. Some buyers will not even look at homes in these areas.

If you don’t like it, you can fix it

Some houses don’t show well, but, with some imagination and good taste, you can improve the look and increase value.

Unattractive exterior. Maybe it needs a new or different paint job. Removing the old fashioned metal awnings could help. What about adding or changing some moldings, or adding a new railing? Sometimes it doesn’t take much to improve street appeal.

Dark interior. Adding or changing windows not only provides more light, but can also improve both interior and exterior appearance. Well placed skylights can do wonders for a dark house. Increasing light significantly enhances the living experience and adds to value. Bright and sunny sells; dark doesn’t.

Lack of charm. It is amazing how some people with the right combination of abilities can transform an unappealing, bland property into one that is cozy and inviting.

Landscaping. An attractive front and backyard are very pleasing. This can often be done inexpensively.

Final thoughts

Every day, people buy properties with some of the issues mentioned above. If you are in this group, make sure to factor into your offer the value of any defects, whether they are curable, and their likely cost. If you are diligent and pay attention to the process, you will be happier with your purchase and get value for your money.

Related Articles: Check Drainage; Not Just Termites, Part 1 and Part 2; Buyers’ Do’s & Don’ts, Part 1 and Part 2; As Is Pointers, Part 1 and Part 2; and Home Inspections, Part 1 and Part 2