What Location, Location, Location Means In Real Estate
Why Location Needs to be Repeated Three Times
It is the real estate agents' mantra: Location, location, location. You've certainly heard the phrase enough and may wonder what inspires agents to say the word three times. In a nutshell, location, location, location means identical homes can increase or decrease in value due to location. The saying is repeated three times for emphasis, and it is the number one rule in real estate, though it is often the most overlooked.
The Epitome of Location, Location, Location
You can buy the right home in the wrong location. You can change the structure, remodel it or alter the home's layout but, ordinarily, you cannot move it. It's attached to the land. The best locations are those in prime spots.
- Top-rated school districts affect location
Homebuyers with children are concerned about their children's education and often will pay more for a home that is located in a highly desirable school district.
- Recreation and nature affect location
Homes abutting the ocean, rivers, lakes or parks hold their value because of the location, providing they are not in the path of a possible natural hazard. People want to be near water or visually appealing settings.
- Scenic views affect location
Some homes sell quickly and for top dollar because they provide sweeping panoramic views of the cityscapes, but even a glimpse of the ocean from one window is enough to substantiate a good location. Other sought-after views include mountains, greenbelts or golf courses.
- Entertainment and shopping affect location
In many cities, you will find homes that are located within walking distance of movie theaters, restaurants and boutiques are more expensive than those located further outside of town. Many people would rather not drive if they can walk to nightlife.
- Conforming areas affect location
People tend to gravitate toward others who share similar values and their homes reflect it. Homebuyers mostly prefer to be surrounded by similar types of properties in age and construction, where people just like them reside.
- Economically stable neighborhoods affect location
Neighborhoods that stood the test of time and weathered economic downfalls are more likely to attract buyers who want to maintain value in their homes. These are people who expect pride of ownership to be evident.
- Public transportation, health care and jobs affect location
Most people do not want to endure long commutes to work, the doctor's office nor the airport. They prefer to be located close to emergency services and conveniences, so naturally homes in locations that shorten travel time are more desirable.
- In the center of the street affect location
Some buyers refer corner locations, but most homebuyers want to be in the middle of the street, which makes them feel less vulnerable.
It's almost easier to talk about what constitutes a bad location than to discuss good locations. That's because the qualities that make a good location desirable can vary, depending on whether you're looking in the city, the country or the mountains. Bad locations, by their general nature, are easier to pinpoint.
- Commercial/industrial areas are bad locations
Unless you live downtown, commercial buildings on your block diminish residential real estate values. Part of the reason is because homeowners cannot control loitering. Homes next to gas stations or shopping centers are undesirable because of the noise factor, and nobody really wants to listen to truck engines idling at night or during early morning hours.
- Railroad tracks, freeways or under flight paths are bad locations
Some city dwellers have homes close to railroad tracks and endure rumbling and other noise 24-hours a day. Excessive noise often makes buyers sell quickly, even when such homes are located in otherwise desirable areas.
- High crime areas are bad locations
People want to feel safe. When cars come and go throughout the night, and the police often visit a neighborhood, the assumption is that the area may have a crime problem. This makes buyers trepidatious about buying homes in that location.
- Economically depressed areas are bad locations
If owners show no pride of ownership in maintaining their homes, evidenced by lack of maintenance, poor landscaping and junk in the yard, you might think twice about moving into such an area. On the other hand, some areas like this are at the center of proposed rehabilitation projects. But, rehabilitation is never a guarantee.
- Close to hazards are bad locations
The bottom line: People don't want to live next door to nuclear power plants. Few homebuyers want a transformer in their yard, either. If the neighborhood was built on a landfill or was recently swampland, nix it. Always order a natural hazard report when buying a home.
Sometimes, in new home developments, zoning and building plans change. I sold a home in Elk Grove, California, in early March just as new construction broke ground in a vacant field behind the home. Instead of putting up single-family homes, the developer built apartment buildings, within 3 feet of the existing homes. The view was gone. A seller a few doors down asked me to sell an identical square-footage home in December. Those apartment buildings affected her value.
While this location was excellent at the time she bought the home, the value of that location had diminished by the time she sold.
At the time of writing, Elizabeth Weintraub, CalBRE #00697006, is a Broker-Associate at Lyon Real Estate in Sacramento, California.