LESSON 7: How To Pick The Right Home For You

Once you've determined how much you can afford to spend on a home -- ideally with a mortgage pre-approval -- take some time to consider what you're really looking for.

Make a list of features you want: number of rooms, lot size, amenities (e.g., fireplace, up-to-date kitchen), sidewalks, architectural style, particular neighborhoods or school systems, etc. Also consider whether you'll need financing from the seller, a particular occupancy date, or other specific contract terms. (Seller listings may mention certain contract terms they will and will not support.)

Now place your preferences in two categories: "must haves" and "wants." With a clear picture of your preferences, your agent will be able to focus quickly on locating and showing you appropriate properties. You'll save time and energy, and you'll be able to choose a home with less anxiety.

Take Notes

One of the frustrating aspects of home shopping is remembering all the properties you look at. You can better keep track of them by creating a standardized form to fill out as you tour homes. (Although some homes may offer a summary brochure of features, others won't.)

Your form should leave room for each home's distinctive details: number of bedrooms and baths; interior colors and decorating style; proximity to schools, shopping and work; neighborhood atmosphere; yard amenities, etc. You may even want to take a Polaroid or digital photo of each home to jog your memory.

Cost vs. Location

Remember, in the world of real estate, a good location is always a good investment. It's likely to cost you more too.

Home values reflect proximity to good schools, shopping, recreation, cultural opportunities, places of worship, and places of employment. Although you may be able to get more home for your money (or the same home for less) away from such things, consider whether increased travel time and hassles are worth the trade-off. A remote location could be your ticket to serenity or a passport to isolation, depending on your unique circumstances and priorities.

Ask yourself:

• Where will family members go most often from this new location? How easy will it be to reach those places? How accessible are schools, churches, grocery stores, medical care, public transportation, shopping malls and neighborhood services?
• What is the view from the house and yard? Is the yard right for your anticipated activities? What uses are possible for nearby undeveloped land? Is a new road or road-widening project planned?
• Is rush hour traffic a problem? What will be the impact of special events such as local high-school games or church picnics?
• How easy is it to get into and out of the driveway? Are streets well-lit at night?
• What utilities serve the property? Are the rates competitive? Where will you get your mail? Where are the easements, if any?
• Is the soil stable? Is part of the property on a flood plain -- if so, what is the history of floods on the property?
• Does the community have special by-laws or architectural controls over changes to a home? What are the pros and cons?
  

Assign priorities to important elements of the home's location. Then make a list of the positive and negative aspects of each property you tour.

Appreciation vs. Neighborhood

Areas that have experienced healthy market appreciation over the past few years are certainly worth considering. Remember however, past performance is not always a reliable predictor of future appreciation or depreciation. A variety of factors affect the stability of property values, including local and national economic trends, the quality of original construction, and the life-stage of the neighborhood.

While newer homes tend to appreciate faster than older ones, they may lack amenities that are important to you -- shade trees, sidewalks, variety of architectural designs, etc. If you seek the charms of an older neighborhood, the presence of an active homeowners association, preservation group or renewal effort will help ensure the soundness of your investment.

New vs. Resale

With a new home, you'll have the advantage of being able to choose the colors and finishes for floors, bath tiles, kitchen counters, cabinets and appliances. You can opt to upgrade and select builder options, and often you can choose a specific lot. Everything will be clean and new when you move in.

On the other hand, you may not be able to see your new home until the final walk-through. There may be a number of items on your 'punch-out list' that need to be fixed or finished by the builder's crew. Often, new-home buyers have to deal with continuing construction traffic, debris, mud, dust and unfinished roads -- at least until the development and adjacent developments are completed. And new homes do have a break-in period, often with problems related to settling.

With a pre-owned home, you can actually walk through the home you are buying, and many personal touches, such as drapes and curtains, will likely have been added. You can also tell what the neighborhood will be like by driving through both during the day and in the evening. Shade trees and mature landscaping often give older neighborhoods a more charming ambiance. Generally speaking, you'll get more home for your money buying an existing home.

The down side of resales: You may find that the seller's tastes are not yours. It may be necessary to redecorate, even remodel, to tailor the home to your own color scheme, design preferences and lifestyle. Also, appliances and systems may be several years old, perhaps approaching the need for replacement.

Outlay vs. Return

Some financial planners recommend buying as much home as you possibly can to maximize the significant tax advantages of homeownership and the potential return on your investment. (After all, a $300,000 home that appreciates 20% over five years would sell for $30,000 more than a $275,000 home appreciating at the same rate.)

If your income is likely to grow in years ahead, it might be wise to stretch your budget for the first few years, buying a home that will accommodate your needs well into the future.

Be careful however, not to ignore the costs of upkeep when making your budget calculations. The more expensive the home and the larger it is, the more costly (and time consuming) it will be to furnish, maintain and repair. Will you have enough discretionary income and time left over for the other priorities in your life?

House vs. Home

Buying a house is certainly a major financial investment. Buying a home, however, is an investment in your family's future. Ultimately, the most important question to answer when looking at any home is, 'Will we be happy living here?' No one can answer that question for you, but when you find a home that sparks an enthusiastic 'yes!' it's time to consider making an offer.

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