As I discussed last month (June 2011 Market Update), after location, one of the fundamental decisions that guide the home buying process is whether to buy a new or a 'used' home. In June, I outlined some of the key factors that should weigh into your decision making process when buying a new home.
However, the reality is, most of us will buy a re-sale home in light of the benefits to doing so, as well as the fact that the vast majority of homes on the market are, in fact, 'used'. Here are some of the reasons for this.
WYSIWYG
What you see is what you get, a strong reason for buying used. Of course, you may not like what you see, or you may not be able to see clearly without a thorough inspection. As a Realtor and a Developer, I offer my clients a greater degree of understanding of the product they are looking at buying.
Customize
If you don't like exactly what you see, you can change it! This is a huge benefit of buying used. A good rule to remember is that almost anything can be changed except for location and overall floor plan.
Having a Realtor who can filter out poor floor plans will make your home buying process much more efficient. For example, avoid homes with a floor plate of less than 500 sq. ft. (i.e. 1,500 sq. ft. on three levels); bedrooms with a dimension under 9 ft. and living rooms less than 10 ft.
I always make sure my clients are buying an efficient floor plan since we pay so much for every square foot in Vancouver!
Creating Value
Surprisingly, only about 20% of the general public can see beyond the cosmetic appearance of a home. This is precisely why developers invest so heavily into 'bling' and why home staging pays off.
Consequently, customizing through renovation gives you a rare opportunity to create value. Creating value means investing an amount that will garner you a larger return on investment.
Not all renovations create value; for instance, over-investing in a renovation or merging rooms can hinder resale. Adding a bathroom to a heritage home, on the other hand, can dramatically increase the potential buyer pool.
When renovating to create value, be careful not upgrade beyond the value of the location or to renovate so extensively that it triggers HST when you sell.
Summary
The statistics say that most of us will choose to buy a re-sale home over a new home. Like buying new, this presents itself with both challenges and opportunities. By buying a home in a desireable location with good fundamentals, you can increase your odds of profiting from real estate.
Think like a developer when making renovation decisions and look beyond the cosmetic. Or, simply allow me to do this for you!
