How to Predict If a Home Will Hold Its Resale Value

Jeremy BiberdorfBy: Jeremy Biberdorf

June 28, 2018June 28, 2018

How to Predict If a Home Will Hold Its Resale Value

While most buyers who purchase a home with a view to living there themselves will have very specific criteria about what they want, when purchasing as an investor, the financial performance of the property is paramount—and the potential resale value plays a big part.

If you’re on the hunt for a property that’s likely to hold its resale value well into the future, here are a few things to look for.

The suburb

Location is possibly the most significant determinant of the future value of a property. We’ve seen it happen time and time again in cities around the globe, where the popularity of a suburb or area surges and we start to see prices reaching new heights in locations that were once considered affordable.

While there are a range of factors that contribute to the popularity and growth in property prices in a particular area, key factors including the proximity to the city and employment opportunities, transport and roads infrastructure, school zones and local amenities, attractions and features are often big draw cards for predicting the next ‘boom suburbs’.

The streetscape

It’s also important to consider the property from a more local perspective—Is the property located in a busy street? Are there any industrial properties close-by that could be a turn off? Are there any council planning proposals that could impact the value of the property if approved?

It’s also worth considering what the surrounding homes are like. If the area is typified by double story homes and you’re purchasing a single story home, buyers looking in the area in the future may want more space than what your property can offer, which will limit your potential resale market.

You should also consider what other properties in the area are selling for and check if the property you’re looking at is on par—chances are, if a property is the most affordable in the suburb when you buy it, there’s good reason for that and those reasons will still stand true when the time comes to sell.

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The design

While it’s common for property markets to fluctuate, you’ll almost always be able to sell a good property. While homes with significant design flaws will struggle to sell during poor market conditions, generally, you should be able to sell a good property for a decent price even during a market downturn.

While luxury home designs typically come with a heftier price tag in the immediate term, if you do find you need to sell in a poor market, the premium quality and finish of your home could be the thing that makes it sell over another similar property.

However, if it’s purely an investment property, it’s important not to go overboard. Opt for properties with contemporary finishes in neutral color palettes that won’t easily become outdated, and look for properties with a flexible floor plan that offer scope for remodeling or updating in the future if needed.

The functionality

When it comes to the functionality of the home, there are five core factors you’ll need to consider—bedrooms, bathrooms, living spaces, parking and outdoor space.

Buyers have very specific requirements for what they need, with the number of bedrooms usually being a ‘non-negotiable’ that will instantly limit your pool of potential buyers. While the number of bathrooms and living spaces are also often an important factor for most buyers, some buyers will be happy to compromise on these if the rest of the home meets the rest of their criteria.

Sufficient parking space is also a big one. A lock-up garage is usually the most appealing, but many buyers will settle for a property with off-street parking if needed. If your property doesn’t provide either a garage or off-street parking, it’s integral you ensure there is ample street parking available or this will likely be a major turn off for many buyers.

Finally, depending on the type of property, outdoor space is also likely to be a big draw card, particularly in areas that appeal to families.

Jeremy Biberdorf
Jeremy Biberdorf

About the Author:

Jeremy Biberdorf is the founder of Modest Money. He's a father of 2 beautiful girls, a dog owner, a long-time online entrepreneur and an investing enthusiast.

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