Neighborhood or House? How to Set Your Priorities
Buy | Jan 13, 2014 | By: Michele Lerner |
In a perfect world, every buyer could afford the house of their dreams in a neighborhood they adore. In reality, most buyers need to compromise on something when they buy a home, particularly their first home.
A REALTOR® can give you expert advice on home values and often can show you homes in communities that you didn’t know about or that you hadn’t considered. In the end, though, you need to set your priorities so you can decide which home to buy.
Start With a List
At the first buyer consultation, your REALTOR® should ask you to make a list of everything you’re looking for in a home – including such things as the number of bedrooms and baths, the placement of the kitchen, the size of the yard, and your preferred location near a particular school, your job, your favorite restaurants or public transportation.
If you’re buying with a spouse or partner, you should each make a separate list and then compare notes. Avid watchers of HGTV programs know that both partners rarely agree on every feature, so step two is to talk about which features are mandatory and which are optional.
As soon as you’ve met with a lender and established your comfort level with a budget you can start matching your wish list with what’s actually available in your area.
Which Comes First, the Community or the Property?
If, like most buyers, you’re not finding the perfect home in your ideal neighborhood, you’ll have to decide whether it’s more important to be in a particular location or a particular size and type of home.
If you decide that location matters more but you can’t afford to buy in your preferred area, you have several options:
◾Look for a smaller home or a smaller lot. If you can live in two bedrooms instead of three, or forgo a large back yard, you may find something affordable.
◾Switch to a different home type. If single-family homes in the area are too pricey, you might find a town home with similar living space that’s less costly. You can consider a condominium, but don’t forget to factor in the condo association fees to see how that fits into your budget.
◾Look for a home in less-than-perfect condition. While you need to be careful about how much cash is required to renovate a property, a home that needs some minor repairs or has flaws that you can live with for a few years can be affordable. You can also look into financing renovations with an FHA 203k loan.
◾Rent a little longer while you save for a home. If you can take on a second job to build up a larger down payment, this could be a good decision, but be aware that home prices could rise more before you’re ready to buy and could still be out-of-reach.
◾Look for a lease-to-own arrangement. Some homeowners may be willing to negotiate a lease-purchase agreement so that some of your rent is credited as a down payment.
If you decide that the type of home is more important than a particular neighborhood, you should work with a REALTOR® with expertise in your local market who can help you identify other communities where you might find affordable homes. An experienced REALTOR® not only can show you different locations but can also talk to you about why some communities have higher home values than others, such as being near commuter routes or a having a reputation for excellent schools. It’s important to make an educated decision about where you buy a home so that you maximize your potential for continued property value.