Considering the resale value

During our weekly trip to Summit County, I came across some good real estate articles in the Summit Daily.  This makes perfect sense so I thought I would share.

 

By Bob Kieber
Special to the Daily

Many clients of mine ask if I think they are getting a good deal on the real estate they are purchasing. I answer by asking them a simple question, do they think they will get back what they have invested in the property when they sell it.

Now I know that some people think this is a difficult question to ask before even purchasing the property, but it should be a consideration in the decision making process of whether they should purchase the property or not. I for one hope to sell my real estate for a profit down the road and I know of no one who really wants to sell the property for a loss. If you do know someone who has those expectations I would be greatly surprised.

The reason I ask the question is to get the potential buyer to think that some day they too may want to sell the real estate. Real estate is in my view an investment and it is one investment that I hope to see increase in value. The other reason I would encourage the buyer to look at future value has to do with the ease of finding a mortgage for the buyer down the road.

A prime example is developers who are looking at building mixed-use properties. Mixed-use properties are those that have both commercial space and residential homes under one roof. Some of these properties are easy to finance as the commercial percentage of the total square footage of the building is less than 20 percent. A prime example would be the condo buildings at River Run in Keystone. The first floors are commercial, housing restaurants, liquor stores, ski shops and other commercial businesses. Since a small percentage of the overall building is commercial, lenders may have little to no problem with this type of usage.

On the other hand, there are buildings that are two story structures and 50 percent of the buildings are commercial and the other 50 percent is residential. These types of structures do not meet the guidelines of most residential mortgage lenders and because the structures do not meet the guidelines, most residential mortgage lenders will not lend their investors cash out on these types of residential units.

So this is the reason that I recommend current buyers look at the potential resale value of the property. If the current buyers have problems finding a lender due to the real estate itself, why would a buyer down the road have any fewer problems getting a mortgage?

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