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Pricing a Neighborhood
Potential homebuyers know the importance of choosing the right neighborhood. But how can you determine if the home you want is priced fairly for the neighborhood you want? Trulia has some suggestions for what to consider:
Check public records. You can find out a surprising amount of information from records that are available to anyone. Most real estate agents or listing services will be able to provide some, such as when the home was last sold and the selling price, as well as tax records going back several years. The county clerk’s office or online records searches should be able to provide similar information about other homes in your desired neighborhood.
Look for popular amenities. A good school system is obviously important if you have children. But even if you don’t, being in a good school district enhances your home’s value. Other amenities that can up the value of a home include easy access to the highway, nearby parks and recreational opportunities, and walkability, especially if you can walk to restaurants and shops.
Look for signs the neighborhood is on the way up. For example, is there new construction of homes, or are there infrastructure improvement projects such as street widening or sidewalk improvement? These can indicate that the neighborhood is likely to become more desirable.
Look out for signs of over-building. While some growth is usually a good thing, look for signs that the neighborhood is becoming too crowded or overbuilt. Be especially wary of plans for large commercial development, which will increase traffic, or high-density housing such as high-rises.
Look for things that might decrease values. Are there several properties that are in foreclosure? Are there homes where the lawns are not mowed and the houses are in disrepair? Does the neighborhood back up on a major highway or train line? These and similar things can make a neighborhood less desirable.
Aim for the middle. Real estate agents call this the Goldilocks effect. You don’t want to buy the most expensive house in the neighborhood because you might not get your investment back if you choose to sell down the road. You also don’t want to buy the least expensive house because you probably will have to put a lot of money into it to bring it up to a par with your neighbors’ homes. (The exception there is if you can get a bargain on a fixer-upper in a “hot” neighborhood, in which case you probably won’t mind paying for improvements.) In general, though, a house somewhere in the middle should be “just right.”