Location is always number one. Keep in mind there are detrimental factors that can seriously diminish value, even in a highly desirable location. An example is a heavily trafficked street.
I know someone who owns a really nice house in an excellent neighborhood, but on a very busy street. In addition, it is directly across from a school that has enormous activity.
Bought during peak of the seller’s market, the selling agent was a personal friend from out of the area. She did not know the drawbacks of this particular location, nor did the buyer.
Now he understands and would not have bought this house and, certainly, not for what he paid. This is one of numerous faux pas buyers have made in the past and continue to make.
Condition - A car with a gorgeous body and a terrible engine will not get you far. The same is true for a house with expensive foundation, drainage or pest control problems. Other potentially costly items are sewer line and roof.
Make sure you do not allow competition to stop you from having complete inspections by competent inspectors. Get written bids. Don’t forget, until you close escrow, the seller owns the house and all its problems. Standard, Realtor® contracts say you are buying "As is," unless you specify otherwise in writing.
Be certain you understand what you are buying. Carefully read all reports and disclosures. Ask questions of your inspectors and the seller. Take nothing for granted.
Lack of permits - It is truly astonishing how many buyers give short shrift to the absence of permits. This oversight could not only compromise your price when you sell, it could result in harm or death to you and your family, particularly if electrical and/or gas line alterations were made without permits. Look not only for the existence of permits, but also that they were finalized.
Also important is major remodeling done without permits: a kitchen or bath redo, an addition to the house or a significant rearrangement of walls and framing. No matter how pretty it looks, buying with these issues is a risky proposition. In the game of musical chairs, will you be the one left standing?
Too many steps - I showed a house last week that had almost 100 steps. Once up there, the view was sensational. As a place to live, navigating this climb on a daily basis is not a pleasant prospect. Even with fewer steps, if you think the climb is too much, so will others when it is time to sell.
Price per square foot (ppsf) - At the peak of the last seller’s market, some homes sold for over $700 per square foot. Considering they could have been rebuilt as brand new and fabulous for less than half that amount, I wondered what these buyers were thinking. Today, as they come on the market, they are selling for well under those figures.
There is an inverse relationship between size of the property and its cost on a square foot basis: the smaller the house, the higher the ppsf. Knowing ppsf can give you perspective. This is available on the Multiple Listing Service information sheet.
