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By 2010, the National Association of Homebuilders predicts that the typical new home will have 2,200 square feet, and offer three or more bedrooms, two and a half baths, and a two-car or larger garage.
That's a far cry from the home built in 1950 with 1,000 square feet or less, two bedrooms, and one bath. By 2000, the typical home was 2,000 square feet, three or more bedrooms, and two and a half baths.
Despite the diversity of households (over 18 percent of homebuyers are single, for example) houses are getting larger and consumers are getting more demanding about amenities. If you've seen a starter home in your city remodeled with granite countertops and commercial kitchen appliances, you know what I mean. Everyone feels they are entitled to the latest amenities.
Only they just don't come with most older homes.
So unless you want to move to the suburbs and start selling builder homes, you have to make the most of your local market.
How can you get buyers interested in homes that don't compete as well with new home bells and whistles?
Acknowledge your competition. New homes are cool. Here's why:
According to the National Association of Home Builders, new homes offer a number of advantages over existing homes, including:
More amenities/conveniences. New homes feature newer and better materials, built-in appliances, high speed data access, more wiring for all those electronics, and goodies like whirlpool tubs, and easy-to-clean plastic tub enclosures.
Safety. Occupants of new homes are almost six times less likely to die from fire than occupants of older homes. Many new homes come equipped with hard-wired smoke detectors on every level, complete with battery back-up should the power go out. Fires are diminished due to the lack of need for space heaters and because of more efficient central heating systems and better insulation. Electrical power systems in new homes are properly sized for the heavier electrical demands of today's homes, and wiring systems are less likely to cause fires. Circuit breakers have replaced fuse boxes, which can be overloaded by using the wrong-size fuse. Ground fault interrupters for bathrooms, kitchens, and outside receptacles reduce the chance of fire and electrocution. Today's glass in tub enclosures and patio doors in new homes must be tempered so that it will crumble if broken instead of shattering into large jagged pieces that can seriously injure people.
Health. The building industry has responded to the health risks of certain products by building with products and systems that make new homes better for your health. Asbestos, which can increase the risk of respiratory disease, has been eliminated from shingles, pipe, cement board, roof tar, floor tiles, ceiling tiles, and insulation. Lead, a potential poison, is no longer used as an ingredient in paint or as solder for plumbing. Formaldehyde emissions from particle board and hardwood plywood have been greatly reduced in new homes. And urea-formaldehyde finishes on most kitchen cabinets are now baked or cured to minimize emissions. Builders are now installing systems to control radon gas, where it is a problem. These systems usually include installation of gravel and polyethylene film beneath basement floors and concrete slabs, and provide for later installation of vent pipes and fans, if required. Older homes frequently have no gravel in which to collect the gas, no polyethylene film to retard movement of the gas through the slab, and no vent pipes. Mitigating radon from an existing home is generally far more expensive than building radon prevention techniques into a new home.
Energy efficiency. Because of better windows, more efficient heating and cooling equipment, better control of air infiltration, and greater use of insulation, new homes consume half as much energy as homes built prior to 1980. Old homes tend to be drafty and less comfortable, and frost and condensation are more likely to appear on windows, drip down, and cause deterioration of wood trim and walls.
Lower maintenance. New homes require less maintenance. New homes are available with siding, windows, and trim that never need painting. Wood decks are typically made of pressure-treated lumber resistant to rot and insects. Pressure-treated wood is also used where wood comes in contact with concrete.
That's well and good if you can afford prices that averaged $200,000 by 2,000, but most can't. That's why many homebuyers start looking in older neighborhoods.
Here's where you can show off the older neighborhood.
What you see is what you get. In an older neighborhood, everything is already built. You can see what is around the corner, what services are nearby, and who your neighbors are. You can see what kind of growth is taking place, and you can review the comparables (similarly priced homes for sale in the same neighborhood). You can see what kinds of updates are being done by other families to make the most of the space and what kinds of amenities they are adding. What is a low-cost neighborhood today may be transformed tomorrow by any number of things: a major new employer, remodeling the shopping center, new construction, and new zoning. In fact, an older stable neighborhood is the most likely to be targeted for change and improvements. No big-time investor will back a project that doesn't have existing or new consumers.
Hot neighborhoods net full recovery of remodeling costs. If your neighborhood is being rediscovered by buyers, they may be more inclined to remodel an older home if you can tell them that they may get 80 percent to more than 100 percent of their remodeling costs back. Improvements help the home, the neighborhood, and the community. An older home takes on charm and appeal with an updated kitchen, new baths, or an expanded master suite, and makes it more appealing for the next buyer.
Negotiation. Because of the low margins on new homes, there is very little opportunity for negotiation. The builder is more willing to sit on an unsold home to get the right price because he has more leverage. The average home owner may be in a must-sell position and may be more willing to deal on issues such as move-in dates or repairs, especially if the buyer insists on a repair allowance. That can provide needed cash to make repairs without your having to incur a home improvement loan right away.
Affordability. Most existing homes are competing with the clean, fresh look of new homes. Very few will go on the market needing paint and other cosmetic touches. Although they don't offer as many amenities, but most families find they can adjust. When you've outgrown your improvements, the buyers can move up to a better home, and/or lease their home as an investment.
Hidden costs. With an older neighborhood, buyers won't be surprised by costs that aren't covered by a new-home purchase, except for unforeseen repairs. Landscaping is already installed, but in many new homes, only the front yard is sodded. If they want grass in the back or trees and bushes, they will have to add them or have the builder add them for an additional fee. Also, many features in model homes are not standard, and become costly add-ons when buyers want those same features for their new home.
Every neighborhood has its gems. You know what the gems are in your neighborhood, or you wouldn't be representing it. Take your buyers on a tour and show them why you love it. Show them the community theater with the visiting acting troupes, the dog park, and the little grocery that imports the best Australian wines and Greek olives. In other words, ask some questions and find out your buyer's hot buttons, and show them the things in your neighborhood you think they would enjoy seeing.
Show your buyers how they can get involved. Neighborhoods are a commitment by neighbors. Your buyers may be interested in making new friends and becoming part of something. What better way than introducing them to the local service league that adopts schools and parks?
Ultimately, the buyer's decision will come down to what they want to spend on a home and improvements, access to work and services, and community amenities. In a new neighborhood, where everything is new and shiny, a lot of selling isn't needed. But in an older neighborhood, you must do the selling. The buyer won't know which way to go unless you tell them what you know about the neighborhood. And who knows? They might just decide that an older home and an investment in restoring an older community is for them.
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