Choosing A Home That Has Value

How to make sure you profit from life's biggest investment

You may want to visit a potential community at night to determine its true character.

Beyond avoiding trouble spots, what makes a good neighborhood? “That’s like asking what’s pornography,” says Ralph Rice, a realtor in Fort Walton Beach, Florida. “You’ll know it when you see it. If you’re near schools and churches, future buyers probably will look upon those as favorable features.” Rice also says that unkempt lawns and nighttime noise are red flags.

Indeed, English credits his choice of neighborhood, in the South Shore area of Chicago, for his property’s appreciation. “It has good access to rail and bus transportation. And I can walk to a golf course,” he says. “Recently, homes in this area have become very popular.”

Karen Anderson Baker, English’s investment advisor, who has an office in Tinley Park, Illinois, stresses that location is paramount. “They bought a house in a revitalized neighborhood,” she says. “It’s not far from his office, which they found appealing, and this convenient location probably will attract future buyers.”

Don’t overpay for your home. If the house of your dreams is beyond your budget, be realistic. “I tell people not to pay more than two-and-a-half times their salaries for a house,” says Williams. “What’s more, you shouldn’t spend every penny you have to buy a house. After buying, you should have an emergency fund of at least three months’ expenses, in cash.”

According to Baker, you should figure out what you can afford to pay and still have money left over for furniture. “Tell the agent what you can afford so you don’t waste time looking at houses that aren’t in the right price range,” she says. There are many online calculators that can help you determine how much house you can afford. Try the GE Financial Center (www.gehomenow.com/Homebuy er/HomebuyerResources/Afford.asp) or Bankrate.com (www.bankrate .com/brm/calc/newhouse/calcula tor.asp).

Look for features that will enhance value. You should not only look for a house you like, but one with features that will enhance its value when it’s time to sell. “A house should have at least three bedrooms and two bathrooms in order to have good resale value,” says Williams. “A two-car garage also is a plus.”

English, for example, chose a spacious three-story house with a big yard to accommodate visiting grandchildren. Lewis needed an even larger house: “With five children, I bought one with three bedrooms,” he says. “It had front and back yards, which we wanted. Even now, it helps to own a big house because we always have relatives coming into town.” Those features, and the popular location he chose, have helped his home almost triple in value from $42,000 to $125,000.

In addition to size, the immediate surroundings of a home can be an important feature to consider. “Look around the surrounding area,” Rice advises home buyers. “If the houses you see don’t look attractive, don’t buy. Some people think a house is a bargain because it’s low-priced, but they neglect to look next door. A house might be beautiful, but if a rundown neighborhood is a

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