The best piece of advice I can give to investors is to never forget the human factors when it comes to evaluating a home. Appraisers and even seasoned real estate buyers and professionals will compare homes based upon location, lot size, square feet and features, but there is also that extremely important “x” factor that good realtors recognize and take into account as they preview homes every week.
What is the x factor? A combination of functionality, flow and light for which buyers will pay a premium. Each week I preview a group of homes of similar size and generally one with just the right layout that will fly off of the market because its layout is unique or rare compared to what’s available in the current inventory. One of the big mistakes builders and renovators often make is that they forget the basic necessities of comfortable living that many take for granted.
It is a reality that homes that lack the basic features of comfort such as a foyer, mud room, well located windows and convenient, uncluttered entrances may not command the same price or interest as those that have them. From an appraisal standpoint, these features may not add a huge amount of square feet or value, but from a market standpoint the right floor plan will create multiple offers that either drive the price up or make the home a much better investment because of its consistent resale potential.
A good investor doesn’t pay more for the x factors (even though we know many people would) but beats the competition to the offer table.
Here’s a secret that can work to the advantage of an investor: If a seller hasn’t been inside of other homes on the market, he or she may not realize how his or her house really compares to others currently for sale in regard to fthe unctionality and flow of the floor plan. Look for x factors before you buy, even if you are buying an investment property.