Real Estate Talk:
Consider resale when buying
Examine issues that may affect resale when investing in a home
By Joseph Marovitch
Updated May 25, 2023
I once sold a duplex in Westmount to a buyer who stated he would only be leaving the house feet first. In other words, the buyer had no plans to move until death. Except, the buyer’s children had grandchildren, and the buyer decided to move to Vancouver, where the rest of the family was.
While owning the duplex, the buyer ripped out the recently installed beautiful kitchen to make it more of an office/kitchen. It was practical for the owner but for no one else. The buyer lost money when selling because the new buyer wanted the property and a nice kitchen.
When purchasing a property, consider how easy it will be to sell. In other words, consider resale value when purchasing.
One of my corporate clients had a five-year contract to work in Canada. The client was permitted to purchase a property while residing in Canada with the prospect of living in the house and selling at a gain when it was time to leave. Immediately upon possession, the buyer painted the walls in the colours of the client’s country of origin. The colours were bright, a mix of reds, pinks, and yellows.
Two months after taking possession of the house, the company informed the client that he was to be relocated to another international location. My client immediately called me and asked, with urgency, to sell the house we had just purchased. I suggested painting the house in a neutral colour. The client refused. During the time I was selling the property, the client had already been relocated and was paying the carrying cost on a property he no longer lived in.
Eventually, within six months of listing the property, a price was accepted that was lower than the purchase price, and a penalty had to be paid on cancelling the mortgage before expiry. When purchasing a property, consider how easy it will be to sell. In other words, consider resale value when purchasing.
‘When searching for a home, in considering resale, price and location play a large factor.’
Some people purchase a property with the idea they are never going to leave that property. We are all part of the circle of life. We have no choice. We are born into our parent’s home. We move to our first apartment. We marry and buy our first house or condo. We have children and need a larger home. The kids move out and we need a smaller home. We get old and require assisted living, therefore, perhaps move to a retirement home. Other reasons to move are financial or work related. People move and consequently, resale must always be considered.
When searching for a home, in considering resale, price and location play a large factor. Is the price fair, and is the location good? Will I get my money back when I sell and will the property be easy or difficult to sell? This is the beginning of the process.
Now you have purchased the home and you want to decorate. You like the colour pink, but does everyone else like pink when it is time to sell? You want more living room, therefore you decide to make the house larger and, in doing so, sacrifice space in the backyard. When it is time to sell, does everyone else like a small backyard?
It is important to get the best price when buying but it is also important to choose the best location possible within your budget. A property should be as easy as possible to sell when the time comes. If you get a great price for a property next to a highway or by train tracks, it may take a very long time to sell and you could even lose money.
‘Buyers are attracted by spacious rooms, nice bathrooms and up-to-date well-designed kitchens.’
Neutral colours in a home, such as off-white, creams and other light colours, are better for resale. Buyers are attracted by spacious rooms, nice bathrooms and up-to-date well-designed kitchens.
Some issues that affect resale negatively are:
- Price too high, house in poor condition, dilapidated appearance.
- Location near a highway, train track or too close to a school, causing noise and traffic inconveniences.
- Dated bathrooms, old-fashioned kitchens, small bedrooms, tandem garages or no garage; pools can be a non-starter for families with young children.
These are just a few issues that can generally affect resale in a negative way. It is better to realize these issues at the beginning than to find out at the end when selling.
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Next article: Latent defects
State of the market
CPI today (inflation rate) 4.41%
Bank of Canada interest rate 4.5%
Inflation appears to be slowly rising, which does not bode well for interest rates. However, demand is starting to rise again. Buyers waiting for interest rates and inflation to drop so carrying costs would reduce cannot wait any longer. People must live somewhere.
‘With growing demand and low supply, we may see prices rise again and renewal of multiple offer scenarios. This is good for sellers but not for a balanced and healthy market.’
With growing demand and low supply, we may see prices rise again and renewal of multiple offer scenarios. This is good for sellers but not for a balanced and healthy market. Sellers who sell must move somewhere as well, and this environment of high carrying costs and high demand leads to increased prices on purchases as well as increased rents.
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Joseph Marovitch has worked in the service industry for over 30 years. His first career was working with families from Westmount and surrounding areas, hosting children between the ages of 6 to 16 as the owner and director of Camp Maromac, a sports and arts sleep away summer camp established in 1968. Using the same strengths caring for the families, such as reliability, integrity, honesty and a deep sense of protecting the interests of those he is responsible for, Joseph applies this to his present real estate broker career. Should you have questions please feel free to contact Joseph Marovitch at 514 825-8771, or firstname.lastname@example.org