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How To Buy A Home In A Bad Time - Tip 2

If you missed yesterday’s Tip 1 – Give Seller higher price, please click here.

Tip 2: Finding Growth

Just like the previous “saving money vs making money” discussion, I think Jonathan from MyMoneyBlog hit the bulls-eye: “Why not doing both?? “

Same principle applies to the real estate purchase : while cutting down the cost, why not finding a house that has potential to grow? I am not talking about sitting on the property waiting for the market to appreciate (although that’d be nice). There are ways to significantly boost your home value without major renovations.

  1. Look for a room to add:
    The home I am negotiating now has only 2 bedrooms. Although it does have another den/sitting room on the main level, it doesn’t have a door so it is not qualified as a 3 bedroom house. There is actually a clause on the MLS remark for this house: 3rd bedroom to be confirmed. To qualify as a bedroom, I think there must be a closet, a window and door(s). I don’t think adding a door can be that difficult and all the sudden, I have a legitimate 3 bedroom home.
  2. Try to add some more finished sqft.
    For an area that has lots of small older homes, every square footage counts. If you look at MLS provided by the realtor, there is a sqft number and a finished sqft number (usually including finished basement). If your neighborhood is sqft hungry like mine, the finished sqft number also matters a lot. So finding a home that has full basement with the potential to be finished can add a lot of value. Adding a sunroom may not be a bad idea either so look for a yard that is suitable for that type of home improvement. Not only you can add sqft to your home, a nicely finished basement and a bright relaxing sunroom also add lifestyle, uniqueness and excitement to the house. This kind of lifestyle “add-on” is usually the key factor to have the buyers to “Fall In Love” with the house.
  3. Try to look beyond the cheesy décor and disgusting wall paint.
    A lot of home owners don’t stage their homes before selling so their own lifestyles and tastes turn away a lot of buyers. The home I am negotiating right now is painted in dark grey with horrible dark grey carpet. The bathroom got some very unpleasant black and white tile. With the owner’s ancient furniture and stone-age décor, the house seems quite depressing and we figured that was probably why it has been sitting on the market for so long. But, it is a very solid home comparing with majority of the homes we saw. It is very well maintained, and has a very nice floor plan. I can picture how charming this home will be after I give it a face lift and change its color and style. So, yes, definitely try to look beyond the wall color and the furniture and focus on the house itself. You can find diamond in the rough that other people can’t really see.

So I think the house I am buying has a lot of potential to be priced in a much higher category once I add a room and possibility some sqft, and insert some energy into it by adding lifestyle to the house. According to my market analysis, a 3 bed 2 baths with 1700 sqft can be sold for $425K - $500K depending on the condition. So, yes, I definitely think this home has some potential to grow. And such growth is able to help me to offset the market downturn if that happens.

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