Homebuyers' Walkthrough: Considerations When Buying a Home
The search for the perfect home requires buyers to make decisions about how to approach the process, the markets they want to explore and the features they need and want. You'll learn more about homes and your own preferences as you start looking.
Real Estate Agents
If you’re in the market for a home, you can spearhead the search yourself using real estate aggregator websites like Trulia.com and Realtor.com, or you can work with a qualified real estate professional. Most people work with an agent since the commission is paid from the seller's proceeds (so it doesn’t cost the buyer anything).
Even if you work with an agent, you can still do your own research online. This can be really helpful because you can see “what’s out there” and get a better idea of exactly the type of home you want. Whether or not you decide to work with a real estate agent, there are certain factors to consider when searching for the perfect home. (See more: How to Find the Best Real Estate Agent.)
The location of a property is a primary consideration, and one of the broad choices that will help you define your home-buying goals. Your price range will help determine the specific geographic location and neighborhood for your home search – but there are other factors, as well. Young professionals, for example, may prefer urban settings, close to work and night life. Families might opt for locations close to good schools and parks. Also, you’ll probably consider the location of your friends, family, job and other interests when choosing a general location to begin your search for the perfect home. (For more, see: The 5 Factors of a ‘Good’ Location.)
Once you’ve determined the general location where you want to buy, you can narrow down the search to several neighborhoods. Real estate aggregators like Trulia.com and Zillow.com maintain current statistics regarding each neighborhood's schools, crime rates, amenities, transit scores and real estate trends. Local chambers of commerce typically provide community profile information including:
- employment rates
- fire and emergency services
- healthcare providers
- places of worship
- planning and zoning
- recreation opportunities
- property taxes
Contact the local police department if you want more information regarding safety, including the types and incidence of various crimes. (For related reading, see: How to Rate a Neighborhood When Buying a Home.)
Homes can be single-family houses, part of a duplex, condominium units, cooperatives, townhouses, mobile homes and even houseboats. They can be one-story, two-story or split-level. Most homebuyers have a strong preference for the type of home they would like, while others may be more flexible. If you plan to retire in the house at some point, think about the features you might want then – such as a master bedroom and laundry room on the first floor. (See also: 10 Costs of Retrofitting Your House for a Senior.)
Style and Size of the Property
The style of the property is another major consideration when searching for your ideal home. Style is important in terms of appearance, but also in terms of function. A home might have an open, flowing floor plan or distinct and formal rooms. Families with small children, for example, may enjoy an open floor plan (you’ll be able to see the kids while you’re cooking dinner), whereas people interested in entertaining may want a formal dining room. Style is a matter of personal preference.
Physical characteristics are another consideration. Some buyers prefer older, more traditional-looking homes, and others favor stylish modern properties. The design and size of the yard should be factored in as well. Manicured lawns and meticulous landscaping may be a priority for you (or even a requirement in certain neighborhoods), or you may prefer a more natural look. If you have small kids or pets, you might want a large, fenced-in backyard. If you’re not much of a gardener, you might want a small, carefree yard.
Most buyers have an ideal square footage in mind when looking for a home. It's important to consider the size, as well as the number of bedrooms and bathrooms. A home, for example, might have plenty of square footage, but not enough rooms to give everyone in the family their own room. In that case, you’ll have to decide what’s more important – the square footage or the number of rooms. Also, if you work from home, you’ll probably need an office space. Likewise, if you have hobbies – such as crafting or playing music – you might enjoy having an extra room for that.
It’s a good idea to consider both your current and future needs. Are you planning to start or add to a family? Will the grandkids be spending summers? Will family and friends visit frequently? Do you plan to buy a boat or RV that will need storage? And, of course, will you retire there in the future? Thinking about these types of questions can help you find properties that will be ideal now and in the future. (See more: The Best Place to Retire is Your Own Hometown.)
Age of the Property
The age of the property is another consideration. Advantages of newer homes include sought-after upgrades such as modern hardwood floors, granite countertops and high ceilings, as well as up-to-date architecture and functionality. Older homes may be outdated in terms of style and functionality, but they are likely to be part of an established neighborhood with mature landscaping. (For related reading, see: Is an Old Home Worth the Investment?)
In can be helpful to look at real estate statistics – including recent and long-term trends – when searching for a home. Real estate aggregators like Trulia.com have a host of tools that provide buyers and sellers with valuable information regarding specific markets and trends. In general, if prices have been in a downtrend, buyers might expect better deals. And the opposite holds true: If prices have been in an uptrend, sellers will have the advantage. (See also: 4 Key Factors That Drive the Real Estate Market.)
Property taxes are based on the value of the property, including land and improvements, and are assessed by the local government. It's important to factor in these costs since, depending on the area, they can be quite high. Homeowners in New York's Westchester County, for example, pay more than $10,000 in property taxes each year, on average. Nationwide, the average is about $3,300. Depending on the location, additional taxes may be levied by school districts. (For more, see: 5 Tricks for Lowering Your Property Tax.)
Homeowner' Association Dues
In some developments, you’ll pay homeowners’ association dues to cover costs such as maintaining common areas and servicing the community pool. The dues vary widely by both area and the development, and it’s highly recommended that you learn about any dues before entering a contract. A large, amenity-rich development doesn’t necessarily have larger HOA dues – if there are many homeowners to share the costs, the fees can end up being less than the smaller development down the road.
In addition to these monthly or annual HOA dues, homeowners might also have to pay a special assessment – a fee charged to pay for an expense that the association’s reserve fund can’t cover. These can be very costly, so be sure to find out (ahead of time) if there are any special assessments on the horizon. And look at the HOA's financials to be sure you are not buying into any problems due to under-funding. (For related reading, see: 9 Things You Need to Know About Homeowners’ Associations.)
It can be challenging to find a home that meets all your goals while staying within your budget. Good deals can often be found if you’re willing to make a compromise on exact location, size or some other variable. Real estate agents typically suggest that you make a wish list that includes features you view as must-haves (needs), and features you would like (wants) – but that wouldn’t be a deal breaker if you didn’t get them. For example, you might need three bedrooms but be willing to compromise on the size of the garage.
Having certain features set aside as "wants" provides some flexibility and generally makes the home search easier. It can also make it easier to find a house in your budget. (See also: Homebuyer Tradeoffs: What Will You Have to Sacrifice?)Homebuyers' Walkthrough: Which Type of Mortgage Is Best?