Tuesday, August 31, 2010

Things to consider when buying a home

Chris originally wrote this in August 2007. I'm republishing it today because it's even more true now than it was 3 years ago. In most of the price ranges I call "real-people pricing", buyers are finding they have to "give" on more of their wishlist than they expected to. This is especially true the lower down the price ranges you go.

Folks who can afford to spend $500,000 or $600,000 on a home still have many choices. Those of us with wallets that only stretch to $100,000 or even to $200,000 find we have fewer options to choose from, and a more difficult decision to make.

While Chris'  advice below might sound like a no-brainer at first, if you let it sink in your home buying process will be much simpler, easier and happier. --- heather

I wrote some time ago (Extra Extra – homebuyer has realistic expectations) about the five major criteria most buyers have to think about when they start their home search, and I think it's a topic that's important enough that I wanted to touch on it again but in a little more detail.

Most home-buyers have it in their mind that they're going to be able to get everything they want in their next home (and within their budget). Unfortunately, most buyers aren't able to reach their initial goals in all five criteria – something will have to give. Here's a look at the five criteria & some thoughts about how they interact:

Price – Would you consider paying more if you found the perfect house? Or is your price range a hard ceiling? If it is, you need to look at homes within that range and be prepared to buy the best one of the bunch, even if it's not perfect. If money's no object, you would buy a palace on the mountain. But since money is, for most of us, a major consideration, we have to determine a maximum price and then stay below it. A little house in a great neighborhood might be the same price as a big house in a lesser neighborhood, but maybe the big house in the great neighborhood is out of our price range..

Size (&/or Number of Rooms) – Is it absolutely necessary to have 2,500 sqft, or 4 bedrooms Plus a den? Or could you make a smaller home work if it has everything else you're looking for. Obviously a larger home will cost more than a smaller home, with all else being equal. For some buyers the home's size is their sole reason for moving – they need the extra bedroom. For others it's an extra that might not be necessary.

Condition – Do you really need to buy a model-home, show-ready, best-in-class home, with all the latest upgrades? Or can you do some of the decorating and upgrades yourself, either when you move in or over the next few years while you live there? If the former is a hard & fast requirement, you're going to be much more limited in your search, and you're going to pay a premium for it.

Lot (size & location) – Lots that are larger, have great views, have less noise, or have something else that's "better" than the neighborhood average will be in high demand. This is one thing about the house that cannot be changed, unlike flooring or countertops. A premium lot will always be a premium lot, and an undesirable lot will always be undesirable. You'll pay for this accordingly, and you'll receive the same consideration when you sell it years from now.

Neighborhood – We all know that some neighborhoods are inherently more desirable than others, and their homes are going to be priced accordingly. If you are completely set that you want to live in a particular neighborhood, you may need to be more flexible on one or two of the other criteria. Or, you might be able to get everything else you want, but in a neighborhood that wasn't your first choice.

Most buyers come to me with some specific ideas about each of these five criteria, but very few buyers are able to hit a home run across the board. The more consideration you give to which of these criteria you're willing to be flexible on (if necessary), the more likely it is that you'll have a successful and fun home-buying experience!

Personally, when we moved last year, we scored well on 3 of our criteria, and got "half points" on the other two, so I gave us a 4 out of 5. Hey, even realtors don't get all 5!