Retailers know that success depends on three things – location, location, location. In the Nashville market, so do home sales.

Some neighborhoods saw home prices rise nicely last month compared with May 2010, while values fell in other areas. In Belle Meade-West End, for example, the average sale price rose by $89,038 to $482,251. In blue collar Donelson, the average price dipped to $111,778. A year ago it was $132,417, according to a market survey by Chandler Reports.

Homes in neighborhoods that offer amenities such as shopping, entertainment and top-rated schools are getting the best offers, says Realtor Charlotte Witzenburg with The Lipman Group Sotheby’s International Realty.

“If you have services, you are going to attract residents,” she says.

Across Davidson County, 867 homes were sold in May, 5.8 percent fewer than the 920 houses that found new owners in May 2010. But the average price increased to $187,770. A year ago it was $182,002, which indicates that home owners are not willing to offer steep discounts.

Owners may not be lowering prices but they are absorbing the expense of making pre-sale repairs that previously might have been the buyer’s responsibility. They have to, says Witzenburg, to compete in a market crowded with houses for sale.

“There’s too much product out there, and buyers have lots of options,” she says.

In Williamson County, both the number of homes sold last month and the average price were higher than a year ago. Last month, 353 houses were sold, more than nine percent more than the 322 homes that were purchased in May 2010, according to Chandler Reports. The average price was up 11.8 percent, to $352,478. A year ago the average price was $315,312.

Williamson County’s performance proves that location matters, Witzenburg says. When speaking with buyers, Realtors cite the public schools, the 200-plus restaurants and shopping in Cool Springs and historic downtown Franklin.

“We can promote the school system. People can afford more house because you are not paying for private education. Downtown Franklin is beautiful, and in Cool Springs you don’t have to go far for dining and entertainment,” she says.

In Wilson County, home sales dipped to 167 last month. There were 175 sales in May 2010. But the average price increased nearly three percent to $189,727. A year ago it was $184,304, according to Chandler Reports. Sales activity in Mt. Juliet, home of the Providence Marketplace shopping center, reflects that activity. Sales were down – 80 last month compared with 86 a year ago – but the average price rose to $215,825 from $205,901.

Buying activity by investors may be one reason prices in some areas are higher than a year ago, says Realtor Frances Garner with Parks Properties in Nashville. Investors are acquiring houses and turning them into rentals to meet the growing demand for housing from people who have lost their homes in foreclosure or a short sale or who have simply put off the idea of buying a house for now.

“Investors are going to be busy,” Garner says.

Weakness in the economy may be another reason not all neighborhoods are performing well. Tennessee’s unemployment rate has remained stubbornly high at 9.6 percent.

“We’re beginning to get forecasts of a double dip (recession). That doesn’t help us, if people are not feeling confident,” Garner says.

Buyers with less-than-perfect credit scores may have difficulty getting a mortgage, says Fridrich & Clark Realtor Elizabeth Walls.

“If the offer is contingent on financing, I tell the owners don’t start packing yet,” Walls says. “Bankers are being careful.”