Buying a Home on a Busy Street
I recently showed buyers a home they wanted to view that was located on a busy street. I told them that I would show it but I also gave them my feelings about making such a purchase. The Oak Lawn home for sale was originally listed at $279,900 and was now priced at $209,000. That might sound like a bargain with such a high price drop, especially in the area.
But at $209,000, it still is not sold. I think it needs to go below $200,000, but even then I don’t think this property is a real bargain because of its location. From articles I’ve read in the past and my own deductions, the value of a home on a busy street (or near a train track, apartment building, commercial buildings, etc.), can be around 15% less than the same home not located near these less desirable features.
New Construction Built on Busy Streets
In many established towns like Oak Lawn, there is little or no land left to build new homes on. Most new construction in the village is done on lots where the original home was razed. Many of these lots are on busy streets.
People purchase these homes and pay high new construction prices because the home is brand new and possibly built to their desires. In this market, a builder might even make changes on a spec home if a buyer asks.
Being brand new is the pull to get buyers to purchase on a busy street or in other areas that they wouldn’t have otherwise chosen. But these buyers usually have a difficult time understanding this when they’re ready to sell.
The home is no longer new and is no longer custom. It is now just another resale home and located on a busy street to boot. That will mean that if a similar home should be worth $450,000, for example, then around 15% needs to be deducted from that price as a starting point.
Another negative to homes in bad locations is the time on market. Buying on a busy street is usually never a buyer’s first choice. That means that having a property on a busy street will take longer to sell than the same property located in a better spot.
In today’s market, with so much competing inventory, I don’t know why anyone would even consider purchasing a property with a negative location. It’s not a good investment as the property will not appreciate in value at the same rate as others. Even if you get a bargain today, you’ll have to give some of that up later on when you try to sell. But for some reason, sellers don’t understand this fact.
As mentioned above, if you are thinking of purchasing a property with negative surroundings, it should be an outstanding value. And you need to understand that when you sell, you’ll have to offer it at a good value, too.
