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Daily Real Estate News  |  May 20, 2011  |   'Country' in Subdvision Name Nets Higher Values
Home buyers are willing to pay 4.2 percent more for a property with the word “country” in the name, and an additional 5.1 percent for the phrase “country club,” according to researchers from the University of Georgia.

In the study, researchers evaluated the effect of property names on home values by analyzing MLS data from Baton Rouge, La., between 1984 to 2005.

Researchers found that buyers do assign a price premium to properties that include the word “country” or “country club” in subdivision names.

Wealthier buyers tend to be more apt to pay for the name, in which they associate with affluence. In fact, researchers say that wealthy buyers are even more willing to pay a premium for a property name that conveys prestige than they are for a good school for their children.

However, during recessionary times, researchers found that the words have less effect on overall buying behavior and that buyers are less willing to pay a premium for the prestige associated with these words.

“The implications of this are important in real property marketing strategies and the understanding of naming strategies,” note the researchers Velma Zahirovic-Herbertand and Swarn Chatterjee in the study. “This implies that a more deliberate and empirically-based study of property names could enable significant improvements in return on investment for investors and long-term home owners. In addition, some assumptions about the primary drivers of home values may be challenged; buyers’ perceptions of real property attributes
may prove as valuable as or more valuable than the real utility of some attributes.”

This is the first such study to find that buyers are willing to pay more for certain property names, when other attributes of a house are equal, the research notes.

Source: “Home Values: What’s in a Neighborhood Name?” AOL Real Estate (May 17, 2011)

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