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The Owner-Builder Book

Iron Webmaster New home owners info (376 comments)

Learning all there is to know about house pricing is easier than mastering a new C library. The problem is it is not all in one place.

A quick example is costing. If you have estimated the cost of development you know the concept. If a living room costs x dollars per square foot a kitchen will cost 4x/square and a bathroom 6x. (approximations only.) The reasons are obvious, a living room is empty space while kitchen and bath are not only smaller but filled with expensive equipment.

The consequences can be dramatic. A huge living room or master bedroom is relatively cheap compared to an extra bath. A bath with a double sink is a great improvement without the cost of an entire second bath. The half bath is not all that much savings.

Planning for a family later? An unfinished area, slab with a roof over it, is 0.5x and makes a fine workshop or place for the pool table while waiting.

A general rule is the neighborhood average sets the selling price. This highest cost house is pulled down and the lowest cost is pulled up. (Cost and price are different, remember) In most parts of the country adding a swimming pool lowers the price of a house no matter how much it cost. The more customized your house the harder it will be to find a buyer who wants your idea of customized.

A home is just a house. Never fall in love with a house. It is not permanent, it is not forever. Neighborhoods change. Newlyweds can do better buying under their potential and saving/investing the excess to buy a better home in a better neighborhood later when they have children and care about the schools and neighbors. This is particularly true if they can buy in a neighborhood being renovated for some reason.

Real estate agents make their money on turnover and satisfied clients. That doesn't mean blind trust in their opinion but they know the areas being renovated. Cars out of line with the price of the houses in a neighborhood is an excellent indicator. It is better to best in the second tier after the trend is set than a pioneer.

For people just starting out, home furnishings are priced to last for at least a decade. Do you really want a high priced, leather living room suite when in a few years your kids are going to be spilling food and drink, jumping and vomiting on it? Creative and Pier One go with affordable and replacable without going to brown bag lunches at the same time.

This year no one needs be reminded jobs are not forever, incomes do not rise forever or working in the same city is not forever. Keep that in mind when buying. And when things change consider turning the property into a rental rather than selling it. There are great tax advantages to doing so. Managing rental property is not for everyone, read up on it.

more than 12 years ago


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