On the flip side, homebuyers looking to build in a new development need to be aware that some lots are going to be less desirable than others. Whether a particular lot has electrical towers in the backyard or bumps up to a busy street, there is a temptation to invest in such a lot because it will be less expensive.
“The biggest factor is going to be how long do you hope to live in this home?” says real estate broker Lori Jo Smith of Bellingham, Washington. “If you live in it long term, at least 10 years, the consequences that are negative are going to diminish.”
But keep your expectations realistic and purchase the lot for the level of discount that you think you’ll assume when you sell the house.
“It’s also key to not build the most expensive house on the street,” Tanson says. “Given that your home will be sold at a discount relative to others, you will gain more of your investment if you don’t build the premium home on the least premium lot.”
Keeping resale value in mind is key.
“You have to think like a seller while you buy it,” says Realtor Sally Messinger of Howard Hanna Real Estate in Pepper Pike, Ohio. “You’re buying it new, so it’s got a bang to it. Once the houses are built, it’s a little less shiny. If you have the one house that has the highway behind it, you’re going to have trouble with that. I tell people: if you buy that house, and you call me to sell it, don’t be surprised when I list it for less than what you’ve bought it for.”
Of course, sometimes a house in an unfortunate location is of no fault of the owners.
“Some properties were in the right location when they bought them, but now they’re in the wrong location – whether something was built up next to it, or things have moved out,” Messinger says. “Price cures all ills. When the price is right, there’s someone who will buy it. There may be a limited number of buyers, but at the right price, you can sell a house in the middle of a cemetery.”
Editor's note: This is an updated version of an article originally posted on December 17, 2014.
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