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Step 3 Shopping For A Home |
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House Hunting Tips |
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Make A List
When shopping for a home, list the features (fireplace, fenced-in yard, new appliance, etc.) that are most important to you in deciding on which home to buy. You should make at least two lists: one should be a list describing your dream home and the other should list the features of the home that are an absolute must have in order to buy it. Establishing "your criteria" early on will save time shopping for inappropriate homes and may keep you from falling in love with one that doesn't suit your needs or buying a home on a whim. Tip: Start compiling your wish list by thinking about what you like and dislike about your current home. When preparing your wish list, factor in both your current housing needs and what you may anticipate a few years from now.
Use a checklist.
Touring multiple homes is a confusing experience for most people. Rather than relying on memory, make notes about the homes you visit. Turn your priorities into a personalized home-shopping checklist and use it track the features of each home.
After viewing each home decided if it's worth considering or eliminating from your list of prospective homes.
Be prepared to make an offer.
Before you begin the home buying process, resolve to act promptly when you find the right house. Every REALTORŪ has stories to tell about a couple who looked far and wide for their dream home, finally found it, and then revealed that "we always promised my Dad we'd sleep on it, so we'll make an offer tomorrow." Many times the story has a sad ending -- someone else came in that evening with an offer that was accepted.
Resolve at this point that you will act decisively when you find the house that's clearly right for you. This is particularly important after a long search or if the house is newly listed and/or under-priced.
Relax.
Granted, buying a home is a major life-altering event. But it's not worth making yourself insanely crazy or super-duper stressed. Save time at the end of your house-hunting expedition to unwind, calm your thoughts and emotions and keep the whole experience in perspective.
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Choosing A Neighborhood |
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Location, Location, Location
You've probably heard the old real estate joke about "location, location, location," but the point still bears repeating. Location is crucial. You need to think about the home's location just as carefully as you do about the house features. Identify what kind of city, community, and neighborhood are right for you.
How far are you really willing to commute to your place of employment? How good are the local schools, shopping centers, public transportation, senior services and other public amenities? Will your new home be next to a vacant lot or a commercial property? Even a picture-perfect dream home can be a mistake if it's in an undesirable location, and a poor-location home can be a particularly bad choice if you anticipate reselling the home within a few years.
Beyond commuting distance to work, you need to evaluate the availability of shopping, police and fire protection, medical facilities, school and day-care, traffic and parking, trash and garbage collection, recreational facilities, places of worship, and other community amenities.
Good neighborhoods, like beauty, are in the eyes of the beholder. For example, being near excellent schools is important if you have young children. If, conversely, you're ready to retire, buying in a peaceful area with outdoor activities may appeal to you, and being next to a noisy junior high school is your nightmare!
Characteristics of Good Neighborhoods
Personal preferences aside, all good neighborhoods have the following characteristics:
Amenities:
Amenities are special features of a neighborhood that make it an attractive, desirable place to live. Wide streets bordered by stately oak trees, lush green parks, ocean views, quiet cul-de-sacs, parking, and proximity to schools, churches, shopping, restaurants, transportation, playgrounds, and beaches are prime examples of amenities that add value to a neighborhood. The more of these perks a neighborhood has, the better from the perspective of most homebuyers.
Quality schools:
You may not care how good or bad the local schools are if you don't have school-age children. However, unless you're buying in a remote retirement or vacation-type community, you had better believe that when you're ready to sell your house most prospective buyers with kids will be deeply concerned about the school system.
Low crime rates:
Most folks today are concerned with crime. As with schools, don't rely on hearsay or isolated news reports. Communities compile crime statistics, generally by neighborhood.
Stability:
Some communities are in a constant state of flux. Imagine what would happen to property values if a beautiful park replaced a junkyard. How about the reverse -- an ugly, multi-story, concrete parking garage appears where there was once a beautiful park?
Pride of ownership:
A home's cost has no bearing on the amount of pride its owners take in it. Drive through any neighborhood, posh or modest, and you see in a flash whether the folks who live there are proud of their homes.
Property values sag when homeowners no longer take pride in their property. Avoid declining neighborhoods which display the red flags of dispirited owners -- poorly kept houses, junk-filled yards, abandoned cars on the street, many absentee owners renting houses, high rates of vandalism and crime, and so on.
Evaluating A Neighborhood
Driving or walking around neighborhoods, looking at street maps of various neighborhoods, and talking with people you know who live in the neighborhood will help you better understand the pluses and minuses of communities you are considering
Neighborhood Quality
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Are the homes well taken care of? |
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Are the homes well taken care of? |
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Are there good public services (i.e., police, fire department)? |
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Are there paved roads? |
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Are there sidewalks? |
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Is there adequate street lighting? |
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Is there adequate parking? |
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Any pet or other neighborhood restrictions? |
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Are the public schools good? |
Neighborhood Convenience
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Will you be near your work? |
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Convenient to place of worship ? |
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Are shopping centers and restaurants nearby? |
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Is there public transportation available? |
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Will you be near child care services? |
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Are hospitals, clinics, or doctors close by? |
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Is there a park or playground nearby? |
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Is there an association offering pool and/or tennis courts? |
Neighbors
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Will you be near friends or relatives? |
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Will you be near other children of your children's age(s)? |
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Is there an active community group? |
Neighborhood Problems
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Decreasing sales prices of homes? |
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Lots of families moving away? |
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Heavy traffic or noise? |
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Litter or pollution? |
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Factories or heavy industry? |
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Businesses closing down? |
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Vacant houses or buildings? |
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Increasing crime or vandalism? |
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Choosing A Home |
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Condition
Along with price, the condition of the home should be a top consideration. Does the home need a new roof? Extensive upgrading of the electrical wiring? New plumbing? Is the home disaster-ready (e.g., bolted to the foundation in earthquake country)? A fixer-upper home with lots of potential can be a great find or a money pit. Will you be able to meet the financial challenges and live with the mess and inconvenience while the home is being brought up to your expectations?
Size and configuration
Is the house the right size for your needs and does it have the right combination of bedrooms, bathrooms and other living areas? Is that small closetless den really big enough for your child's bedroom? Is one bathroom adequate and if not, what are the real costs and headaches of adding a second one? Does the kitchen have enough cupboard and countertop space? Is the garage wide enough and deep enough for your vehicles? Will your piano really fit in that alcove near the staircase?
Comfort
Does the house have a central heating system? A central air-conditioning system? Are those climate controls important to you? Are the windows large enough and positioned to create cross ventilation? If the house has two stories, are you comfortable with the idea of walking up and down stairs every day? Is there a downstairs bathroom (and bedroom, if needed) for guests who can't navigate the stairs?
Style
Is the design and architecture of the house too modern or too traditional for your preferences in furniture and home furnishings?
Resale potential
People move to a new home every seven years, on average. If you wanted to sell your home or were forced by unexpected circumstances to sell it, how easy would it be to find a ready, willing and able buyer?
Features
Some buyers fall in love with pricey home amenities that seem attractive and desirable at the time, but later prove to be more headache and less pleasure than the buyers anticipated. Do you really want a swimming pool? High-maintenance ornamental trees? Commercial-grade built-in kitchen appliances? Expensive hardwood floors? Some homes are easier to visit than they are to own.
Type of home you want
You also need to figure out the type of housing you want. Do you want a condominium or a cooperative? A town house or a detached single-family home? In terms of construction materials, do you want brick, stone, stucco, wood, vinyl siding, or another building material? Do you prefer a new home or an older home?
Types of homes
In addition to single-family homes (one home per lot), there are other forms of home ownership:
Multifamily homes: Some buyers, particularly first-timers, start with multiple family dwellings, so they'll have rental income to help with their costs. Many mortgage plans, including VA and FHA loans, can be used for buildings with up to four units, if the buyer intends to occupy one of them.
Condominiums: With a condo, you own "from the plaster in" just as you would a single house. You also own a certain percentage of the "common elements" -- staircases, sidewalks, roofs and the like. Monthly charges pay your share of taxes and insurance on those elements, as well as repairs and maintenance. A homeowners association administers the development.
Co-ops: In a few cities, cooperative apartments are common. With those, you purchase shares in a corporation that owns the whole building, and you receive a lease to your own apartment. A board of directors supervises management. Monthly charges include your share of an overall mortgage on the building.
New or Pre-Owned
New Homes
New homes have some very appealing advantages:
Choosing a new home produced by a reputable builder of high-quality properties gives you the peace of mind of knowing that your home doesn't contain asbestos, lead-based paints or formaldehyde. Furthermore, you can rest assured that your new home complies with current federal, state, and local building, fire, safety, and environmental codes.
A properly constructed new home should be cheaper than a used home to operate and maintain. Operating expenses are minimized because a new home should incorporate the latest technology in energy-efficient heating and cooling systems, modern plumbing and electrical service. And with a quality new home, your initial maintenance expenses are practically nonexistent because everything is new.
New homes have enough wall and floor outlets to accommodate all your high-tech goodies. No unsightly, hazardous tangle of extension cords for you.
New homes are only as good as the developers who build them. Visit several of the developer's older projects. Ask homeowners in older developments whether they'd buy another new home from the same developer. See what kinds of problems, if any, they've had with their home over the years. Inquire whether the builder closed the sale on time and honored all contractual commitments, including the completion of any unfinished construction work, on time.
New homes also have some disadvantages:
What you see usually isn't what you get. You see a professionally decorated, exquisitely furnished, beautifully landscaped model home. When touring a model home, ask the salesperson to explain exactly what is and isn't included in the no-frills base price.
Prices are less negotiable. Developers maintain price integrity to protect the value of their unsold inventory of homes and to sustain appraised values for loan purposes. Rather than reduce their asking prices, developers bargain with you by throwing in free extras or giving you upgrades in lieu of a price reduction.
Some developers attract buyers by pricing bare bones houses very close to their actual cost, and then make substantial profits on extras and upgrades. If, upon doing some comparison-shopping, you find that these items are outrageously overpriced, buy the bare bones house and purchase extras from outside suppliers.
New homes are usually more expensive than used ones on a price-per-square-foot basis. Land, labor, and material costs are higher today than they were years ago when the used homes were built. And don't forget that you're buying a home without any wear and tear.
New homes may have hidden operating costs. Developments with extensive amenities usually charge the homeowners dues to cover operating and maintenance expenses of common areas such as swimming pools, tennis courts, exercise facilities, clubhouses, and the like. Some homeowners associations charge each owner the same annual fee. Others prorate dues based on the home's size or purchase price -- the larger or more expensive your home, the higher your dues. If the development has a homeowners association, find out how its dues are structured and what your dues would be.
Just because a home is brand new doesn't mean that it's flawless. Moreover, builders work for profit and may be tempted to cut corners to maximize their short-term profits. Even a brand-new home should be thoroughly inspected from foundation to roof by a professional property inspector.
Pre-Owned Homes
Used homes have many great features:
Used homes are generally less expensive than new homes. As a rule, folks who bought houses years ago paid less for their homes than developers charge to build comparable new homes today.
Asking prices of used homes are generally much more negotiable than asking prices of new homes. Sellers of used homes don't have to protect the property values of an entire development.
Used homes are usually located in well-established, proven neighborhoods. With a used home, you don't have to wonder what the neighborhood will be like in a few years when it's fully developed.
Used homes have been field-tested. By the time you buy a used home, its previous owners have usually discovered and corrected most of the problems that developed over time due to settling, structural defects, and construction flaws. You won't have to guess how well the home will age over the years.
You should still have it thoroughly inspected (inside and out) by qualified professionals before you buy it. The last owners may not have had the time, desire, or money to fix problems. They may also not have been aware of hidden problems. Be sure that the home meets today's building codes; doesn't have environmental, health, or safety hazards; is well insulated; and so on.
Used homes are "done" properties. When you buy a used home, you generally don't have to go through the hassle and expense of buying and installing carpets, window coverings, and light fixtures. The work is already done and everything is generally included in the purchase price.
Buying a used home may be the only way to get the architectural style, craftsmanship, or construction materials you want. Perhaps you want plaster walls, parquet floors, stained glass windows, or some other kind of materials or craftsmanship that is unaffordable, if not impossible to find, in new homes.
Like new homes, used homes also have some disadvantages:
Used homes are generally more expensive than new homes to operate and maintain. Some used homes have been retrofitted with energy-efficient heating and cooling systems. The older a used home's roof, gutters, plumbing system, furnace, water heater, appliances, and so on, the sooner you'll need to repair or replace them.
Before buying a used home, ask the seller for copies of the last two years' utility bills (gas, electric, water, and sewer) so you can see for yourself exactly how much it costs to operate the house. If the utility bills are horrendous, ask your property inspector about the cost of making the house more energy efficient.
Used homes generally have some degree of functional obsolescence. Examples of functional obsolescence due to outdated floor plans or design features are things like the lack of a master bedroom, one bathroom in a three-bedroom house, no garage, inadequate electrical service, and no central heating or air conditioning.
You may be attracted to an utterly charming older home in a lousy neighborhood. Even though you may be able to ignore graffiti on every wall, will prospective buyers be equally tolerant when you are ready to sell? Remember: "location, location, value."
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Step 1 Deciding to buy a Home
Step 3 Shopping for A Home