Location, Location, Location?

Right now, we know of quite a few lots in Orem, UT that are a great deal, but aren’t necessarily in the best locations. We’re targeting these lots to build houses for clients on them because of the price. Many interested people have asked me how that affects the value of their home in the long run.

In my experience, the old adage “location, location, location” holds true when comparing houses of like size. What do you do if you have a property where the location isn’t so good? What if you’re interested in a home that isn’t in a prime location?

As a seller, the main way that I’ve been able to offset a bad location is with price. In a purchase, a bad location doesn’t necessarily scare me off. However, if the location is bad, I better be getting a great deal when compared it to similar homes in better areas. In my opinion, there will always be people out there that are willing to give up “location” for a better price.If you’re going to buy a home in a location that’s not as good, that’s not necessarily a bad thing. However, if you’re paying the same as you would for a similar house in a better area, you’re not buying smart. You should be getting a great deal and expect to be giving a deal when you sell it on down the road. People would argue that your purchase won’t appreciate as well, but this is only partially true. It’s all relative. As long as you buy right, you should be in an okay position to sell when the time comes and get plenty of appreciation. As I’ve been told, “You make your money in the purchase of a property, not in the sale.”

Back to the Orem Lots, they’re currently priced at about 50% of what other comparable lots are. When you consider that you could build and buy one of our houses on one of these lots for the same price as an older home of the same size that’s in a comparable area, I’d say you’re in a good position. You just have to remember that when you sell, you’ll be competing with those same homes. You’ll look great against those homes, since you’re newer for the same price. Newer homes in a better location are not your competition, however. They paid more for their home originally, so even though they might get more for the sale of their home, they didn’t necessarily make more than you did.


Gregory Brown
www.legacyhomedesign.com