Location, Location, LOCATION; you’ve heard it before right? I’m sure you have heard it a million times over, in many different ways, sometimes subtle and sometimes not so subtle. We all know, or at least we should know, that location is a key factor in determining the right price of a piece of real estate.
Observing online commentary of late has me wondering if people actually understand the importance of location and how it translates into price. It seems fairly straightforward to me, Excellent Location = Higher Price, Crumby Location = Lower Price. Seems fairly apparent, but not so.
For example, Alice purchases a home 30 KM outside of the City Limits; it sits on 5 acres, it is gorgeously updated, located on a private dirt road, and is serviced by a private well and septic system. There is no garbage pick up, no street lights, no sidewalks, and the road may or may not be regularly maintained. Alice paid $249,900 for her beautifully updated, rural residential retreat.
Joe purchases a less updated home on 5 acres, within City Limits. Said property is strategically located alongside a major expressway, with frontage on an equally busy road, directly across from a major industrial park. Said property could potentially be rezoned commercial, and might make an excellent location for condominium development or some other commercial development.
Guess what folks- Joe paid $349,900 for his less updated home, but we are not comparing apples to apples here. The value in Joe’s purchase lies more in the LOCATION of the property, and less in the home itself.
Similarly, Wanda just purchased a beautiful bungalow in the East End, while her Sister Jane purchases a fixer upper in Mariday Park.
You got it! Jane paid a good sum more for her home than Wanda did, despite the fact that Wanda’s home is much more updated. In fact, Jane may have paid more than two times the amount that Jane did based on square footage and lot size.
The moral of the story is this; when you see an ad for a home that you do not feel is updated enough to warrant the asking price, remember these words; LOCATION LOCATION LOCATION!