When most of us buy a home, it’s with the idea that we’re going to settle in and enjoy it for years or even decades to come. But not every home purchase is forever.
Thanks to HGTV shows, we all know there are property flippers out there who try to make a profit, but there are a whole host of other reasons why someone might buy a home knowing it isn’t the place they’ll stay forever. From personal preferences or major life transitions, to needing to relocate for work, wanting to up- or down-size, or other unexpected changes, life has a way of throwing curveballs at you.
When you hold onto your home for a shorter time than most homeowners — which, according to most industry experts, is once every seven years — the equity you’re investing also has less time to grow. That’s why it’s essential for short-term homeowners to pay even closer attention to the factors that could affect their resale value when deciding which home to buy.
If you’re looking to buy for the short-term, the following are a few extra considerations you should keep in mind to find a house that meets your needs now, while protecting your investment when it's time to sell.
Location, location, location
We’ve all heard the adage that the three most important things in real estate are “location, location, location.” But it’s especially true for people who plan to sell soon. For example, properties in urban areas that are close to schools, transit and other amenities are usually easier to sell and hold their value better.
“‘Location, location, location’ is a cliché for a reason,” says Nicole Darbaz, a REALTOR® and owner and founder of the Darbaz Real Estate Group in St. John’s, Newfoundland and Labrador. “But location doesn’t just mean a great neighbourhood. It includes things like avoiding main roads with a lot of traffic, or looking for homes that have a sunny exposure in the backyard.”
For Chris Coveny, a REALTOR® and broker with Royal LePage Performance Realty in Ottawa, it’s also important to consider the community you’re buying into.
“Pick and invest in the best neighbourhood you can afford with the amenities you love,” he says. “Buying the worst house in the best neighbourhood you can afford sounds funny, but neighbourhoods hold appeal, and the lowest entry points will always offer great resale.”
“Another unique consideration is average days on market,” he adds. “If resale is a priority, make sure you purchase in an area that sells quickly.”
Your REALTOR® can help you get that information.
Type and age of home
It can also be a good idea to look for a newer home, especially if it’s the kind of home (single family versus a condo, for instance) that’s most in demand in your area.
Older homes can boast unique features and plenty of charm, but they also require more time and money to maintain. Plus, younger buyers tend to prefer updated homes. So if you choose an older house, it could limit potential buyers, and increase the time it takes to sell.
If you do decide to buy an older home, look for one that already has upgrades to the major systems, like the roof, plumbing and heating. According to Darbaz, the number of bedrooms and baths can also be a big plus.
“If you want your listing to capture the largest audience possible,” she says, “purchase a home with at least three bedrooms and two bathrooms, even if the second bathroom is a half bath.”
Upcoming renovations
Another important factor is the cost of any renovations that might be needed between now and when you want to sell. The keyword here is needed. If the home you have your eye on needs a new roof, for instance, you’ll have to either pay for it yourself or subtract the cost from your list price. Either way, it could be wiser to look for a place that won’t require you or your buyers to make any costly renovations anytime soon.
“Upcoming repairs or improvements on big-ticket items will certainly affect resale value,” says Dave Ozubko, a REALTOR® with RE/MAX River City in Edmonton. “Another example would be a condo that has high condo fees and an upcoming special assessment or levy. Those costs are ultimately put back on the unit owner, and they can be a big deterrent for resale.”
If you do want to make changes to the home to align with your personal style, think about renovations that will add value without costing you, like new light fixtures or a fresh coat of paint. As Darbaz notes, “the three top areas are always the kitchen, baths and exterior. If you’re willing to take on renos in these areas, you’re almost certain to win, even in the short term.”
And don’t forget to keep up with regular maintenance and cleaning, even if you’ll only own your home for a short time.
“Homes that are well kept and show pride of ownership are always highly sought after, and sell faster for more money,” Ozubko says.
Check out the land survey
It’s also a great idea to have your REALTOR® look at the local land survey for you before you make any final decisions. In addition to highlighting any easements or rights-of-ways that could restrict what you can do with the property, a land survey will also give you an idea of any major changes that are in the works that could affect your new neighbourhood and your resale value.
“It’s crucial to know your neighbourhood and any upcoming new developments,” Ozubko says. “Busy roads typically get busier. Empty fields often turn into apartments. Ask questions, do your homework, and make the best decision to protect your investment.”
For instance, is someone planning a new high-rise across the street that will block that beautiful view you paid a premium for? Conversely, are there plans to build a new school nearby that might add value to your property? Getting your REALTOR® to paint a clearer picture of what the neighbourhood might look like when you want to sell can help you make a more informed choice.
The high cost of white elephants
Lastly, your new home might have a unique or unusual feature that you love — like an indoor pool, or a garage that was transformed into a yoga studio. But since you’ll only be able to enjoy it for a few years, is it worth the lower price you might have to accept from a buyer who’ll want to turn that transformed space back into a garage?
One of Coveny’s clients, personal chef Luisa Rios, experienced exactly that situation when she and her husband had to sell their new condo after only two years to move from Ottawa to Vancouver for work. The rooms in their loft-style unit were all separated by sliding panels rather than traditional doors.
“We loved how they let us open up the entire place,” Rios explains. “But when we went to sell, it ruled out a lot of families who wanted more privacy. This reduced our pool of buyers and our asking price pretty significantly.”
How a REALTOR® can help
Regardless of what you decide, your first step should be to seek the advice of a REALTOR® who knows the market where you want to buy and things you should pay attention to.
For example, did you know the provincial government in British Columbia recently announced a new 20% “home-flipping” tax on homes that are sold less than two years after they’re purchased? Your REALTOR® will be able to help you sort out things like this.
Working with a REALTOR® can help you maximize your resale value, protect your most important investment, and find a home that meets your needs both today and tomorrow.
— REALTOR.ca