Location, Location, Location… or so it is said.
January 17th, 2009 Categories: For Buyers, For Sellers, Lilburn
There is no older, more often stated and generally accepted “truth” in real estate than “Location, Location, Location.” The say is that “the three most important things in real estate…”, well, you’ve heard it I’m sure.
As with most misconceptions, it is based in truth.
Location certainly is one of the three most important aspects in real estate… but it isn’t #1 or #3… Just #2.
The reality is that location is important, but not as important as price. So, the reality is this…
- Price
- Location
- Condition
Price can overcome almost all. And while an individual buyer might choose one property over another because of location, “price” has trumped “location” in the larger sense. Look at Atlanta as an example. A few years ago, one could buy a 2 bedroom condo with just under 1,000 square feet in a nice building in midtown for about $200,000. For the same $200k, that person could buy a 2300 square foot home on about 1/2 an acre in Lilburn. Or they could push out to Suwanee or Buford and buy a 3000 square foot home with a basement on over 1/2 an acre. Getting back into Atlanta, that 3000 sf home would cost upwards of $500,000. Simply put, if it wasn’t about the money, there wouldn’t be people commuting an hour to work downtown. Too many people can’t or won’t pay the money for the location.
And just to remind everyone about the power of price… it can overcome location, condition, repairs, design, fear… at some price level. It isn’t all powerful… there are exceptions. Like Detroit. There were actually homes there that were over-priced even when they were free.
Everyone knows about location. The right neighborhood can command a premium price. Convenience, lifestyle, proximity. But the premium always has a limit. The premium has a price.. and people just won’t pay over that price to get the location.
The third leg of the stool is condition. When given a choice… condition wins. It really is that simple. I have worked wit ha LOT of buyers that said “I would LOVE to find a house that needs some fixing up if I can get it for a discount.” And while I hear it a lot, I see many of the same people choose the more expensive home because of the condition. Again, there is a limit to that… but it is sometimes higher than one may think…
Bottom line…
At best, the three are tied… but in no way is location more important than price. But, even if they are ranked, they are like the three legs of a stool. In order to make a house sell, it needs to have the three in balance. Weaknesses in location and/or condition MUST be balanced by the price. Strength in location and/or condition may offset a higher price… to a point.
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