It's important to visualize your needs and plan ahead. "Know what you want in a home, what's important to you, and what you can live without," Jack Pearce, ABR, Broker of RE/MAX Valley Real Estate, Boardman, Ohio says. "Many of us start out with a champagne taste and a beer pocketbook, so it's important to be realistic," he adds.
Where and what you buy will affect you for as long as you live in the house. "Get your priorities in order before you start looking or even talk to a real estate broker or sales associate," Pearce says.
For first-time home buyers this is a new experience, so it's especially important to do your homework. If you currently own a home, you know exactly what's lacking. You may need another bedroom or bathroom, or a good school nearby.
First, decide where you want to live. A big part of the answer hinges on where and how you earn a living. If your job requires a lot of reading or is quite stressful, public transportation may offer valuable time to sit quietly. "Regardless, you should practice the commute in rush hour before you make a commitment. A seemingly quiet road can transform into gridlock during peak hours," Pearce cautions.
People with children have other major considerations: school and safety. If you plan to send your children to private schools, you can live where you want assuming you can easily arrange transportation. On the other hand, a lavish public school system may indicate high local real estate taxes. Check them out.
Obviously, lifestyle is an important consideration. People who frequently dine out, go dancing and attend the theater probably belong in the city or a close-in suburb. "In other words, make sure you're in close proximity to the things that matter most," Pearce says.
It used to be that homes came in a limited variety, but today, you have many choices. In addition to the traditional single-family home, you can buy a townhouse, condominium or apartment condominium or co-op.
In planned unit developments (PUDs), you can find almost any combination. In condos and other such communities, make sure the rules and regulations, as well as the by-laws, match your lifestyle. This type of housing is great for people who want to own their own space without being responsible for mowing the lawn or repairing the roof; a management company handles that.
On the other hand, you'll pay fees for these services. "In addition to checking the documents and financial soundness of the homeowner's association, you must determine if the monthly fees are worth the services and additional amenities such as a swimming pool or exercise room," Pearce explains.
Affordability can be a factor not only in the type of housing, but whether it's new or an existing home. Old houses often have fine woodwork or interesting nooks and crannies not normally found in new homes. They generally sit on landscaped lots with mature trees and grown bushes.
New homes may cost more (more here), but you can make many more decisions on amenities, colors, carpeting and fixtures. "Make sure you're dealing with a reputable builder, and have an attorney review all documents, Pearce says.Selecting a real estate professional is an important first step in beginning your search. "Ask for personal recommendations to find an individual who is knowledgeable about the neighborhood and has access to the local Multiple Listing Service," Pearce says. Make sure you feel confident about his or her knowledge and skills, and understand the business relationship that you have established between you.
Jack Pearce is one of more than 40,000 members of the Real Estate BUYERS AGENT Council (REBAC) of the NATIONAL ASSOCIATION OF REALTORS® , who have attained the ABR®, Accredited Buyer Representative, designation. As the world's largest association of real estate professionals focusing specifically on representing the real estate buyer. REBAC is "The Voice for Buyer Representation," with more than 44,000 active real estate professional members of the organization throughout the world.
As for the return on your investment, home-price appreciation is hard to predict. In the late 1980s, and again 10 years later, the more expensive move-up housing appreciated wildly. But during the recession that followed, smaller homes tended to hold their value better than more expensive ones. The same seems to be holding true in the current down market. Homes that are more affordable to the majority of the people tend to hold their value better.
There also are a number of economic considerations. Unlike renters, home owners who secure a fixed-rate loan can lock in their monthly housing costs and make prudent investment plans knowing these expenses will not increase substantially.
Home ownership is a highly leveraged investment that can yield substantial profit with very little upfront investment. However, such returns depend on home-price appreciation, and whether or not you are able take advantage of the tax advantages afforded homeowners buy itemizing your tax returns.
In terms of monthly money outlay, renting is almost always cheaper, even after taxes. However, the money saved by renting will almost never equal the gains that real estate price appreciation can afford the homeowner.
As for evaluating the risk associated with home ownership, David T. Schumacher and Erik Page Bucy write in their book "The Buy & Hold Real Estate Strategy," John Wiley & Sons, New York; 1992, that
"good property located in growth areas should be regarded as an investment as opposed to a speculation or gamble." The authors recommend that prospective buyers spend a few months investigating a community. Many people make the mistake of buying in the wrong area. "Just because certain properties are high-priced doesn't necessarily mean they have some inherent advantage," the authors write. "One property may cost more than another today, but will it still be worth more down the line?"
Because of the social and financial advantages to homeowners such as tax breaks and appreciation, most financial experts advise homeownership or real estate investment as a part of most wealth building programs. However, homeownership isn't for everybody and sometimes renting can be the more prudent venue. OurValleyHomes' "Rent vs. Buy Calculator" will point you in the right direction in choosing whether you are better off renting or owning your home.
For a summary of the seller obligations imposed by the Disclosure Law and your rights as a buyer under the law:
For a summary of the type of defects that are covered by the Disclosure Law: