This is the sixth article in my series, Buying a Home 101. This step-by-step series will take you through the entire home-buying process – from finding a buyer’s agent to settlement day, and even maintaining your home after you’re all moved in. Make sure to tune in every week!
House hunting can be overwhelming, time-consuming, and yes, even exhausting some days. But there’s no reason it has to be that way if you follow some simple strategies that will streamline your search and make you “shop” productively. Before you know it, you’ll actually be having fun looking at homes!
But before you even start looking at homes, you need to go through several steps in the buying process. You’ll need to carefully consider your budget, location ideas, and the criteria (number of bedrooms, etc.) of your future home.
By doing all this prep work, your house hunting experience can be fun, and much more enjoyable and easier overall. Plus, you’ll have the confidence and the ability to put in an offer and, ultimately, have a successful closing.
First, Understand The Process and Get Pre-Approved.
Your first step is to become educated about buying a home by meeting with an agent who will go over all the steps with you. You don’t want to rush ahead to house hunting until you know about the entire process from beginning to end.
Next, Know Your Three “Buckets”
You want to house hunt with a plan and a purpose, and there’s were these three “buckets” play a key role – budget, location, and criteria.
I use an analogy of three buckets, where each and every factor you need to consider when house hunting fits into one of these three buckets. Each bucket doesn’t have to be equal in “weight” but the total weight combined of the three buckets must balance the scale they sit on. That’s your ultimate goal.
It’s important for you to understand these two requirements before you start viewing home:
- Know where you are with the specifics for each one of the three – budget, location, and criteria; and
- Know how each one can affect or influence the other in your search for a home.
Undertaking this step and seeing how each is linked is essential! If you “pour” too much in one bucket, you’ll need to adjust another bucket, and so on.
Looking at budget, location, and criteria in this way can help you find the balance you are seeking, which can lead you to a home that is affordable, in a location that meets your needs, and that satisfies most of your wants.
Let’s do a review of the three buckets:
1 Budget – How Much Can You Really Afford?
One of the first steps before you house hunt is to get pre-approved for a mortgage by a lender. Being pre-approved carries more weight with sellers than being pre-qualified.
Going through this process requires you to know your monthly budget and what you can afford to pay toward a mortgage. I emphasize monthly mortgage payments, first and foremost, before you move on to price range.
Once you’re pre-approved, you’ll have narrowed down a price range you can afford. Then you can search for homes within your approved amount. (But remember, even if you are approved for more by a lender, stick to your own monthly budget requirement!)
2 Location – What Lifestyle Are You Looking For?
Once you’ve got your budget done, it’s time to move on to location, location, location.
Remember, the location of your home will affect everything about your lifestyle and day-to-day life – whether it has urban conveniences or a suburban commute – so always keep that in mind.
First figure out WHERE you want to live in the metro region – DC, MD, or VA? Which specific neighborhood or even another similar neighborhood do you picture yourself living in?
Think about the characteristics of a neighborhood and ask yourself why is that important to you since it could be replicated it in a similar, less expensive neighborhood. And don’t be hesitant to even look at another similar neighborhood that wasn’t originally on your radar. It could meet your wants and needs too!
Really think about your daily life. Love walking to work and don’t want that to change? Then, that becomes a “must” and some of your criteria could change (size, condition, etc). Then you know you are willing to buy a smaller, more affordable home if you must live in a neighborhood you absolutely love near work.
There are certain factors in a location – both desirable and undesirable – that you should consider when you look at a home for yourself and for resale value. Does the neighborhood have good schools? Is the home on a busy corner lot?
Also, keep in mind that revitalizing neighborhoods can be on your list if “desirable” neighborhoods are out of your price range. An up and coming neighborhood could be a bargain if you time it right, but you need to tread carefully.
Once you narrow down a location, your budget will determine what type of home you can afford in that particular neighborhood – such as a detached home, townhome or condo unit.
Not happy with the results? Then you will need to adjust your “buckets.” Decide whether it makes sense to change neighborhoods, tweak your budget a bit, or maybe rethink your list of “must haves.”
3 Criteria – What Do You Want and Need in a Home?
When I say criteria, I mean things like how big, how many bedrooms, condition, etc. Aspects of the home itself you require. In can include both needs and wants.
You should have a written a list of your needs and wants in a home from when you first met with your agent. Now is the time to look over that list again carefully and REMEMBER these Items!!
It’s very easy to get sidetracked once you start looking at homes and forget what your deal breakers are in a home.
This list will make your search much more efficient and keep you focused on what is important to you and your family in a home, in a location, or in a lifestyle that you picture yourself in every day.
You might never find the “perfect” home buy you must decide what you need and also want in your home.
Remember that your needs are different than your wants. You need two bathrooms but want a master bath and suite. You need three bedrooms but a fourth bedroom would be nice for guests. See the difference?
It definitely can be hard to choose what you prefer more (location or three bedrooms) or what you’re willing to do without (large backyard or update, renovated kitchen). That’s why you need to keep referring to your list of must-haves and deal breakers to stay focused.
Go back and review How Your Needs and Desires Lead to “Home Sweet Home” to get more details.
Then, Put It All Together
Now that you understand the three buckets – budget, location, and criteria – it’s time to put them all together. I’ve shown you a little bit of how you have to adjust each bucket at times to find a home. Let’s now go into a bit more detail.
Depending on how long you plan to live in your new home, you should rank the three buckets from most to least important. Yes, they are all important, but what is YOUR #1?
Once you know your #1 bucket, you can start house hunting since you have a specific goal in mind. But, if you get frustrated or stuck, then you might just need to fine-tune or adjust ONE (not all) of those buckets. That’s why it’s important to be flexible on some things and know your deal breakers.
You should have a better idea of what type of home you can afford in a particular neighborhood that fits your budget. There are pros and cons to all types of home, and that is something to discuss with your agent who can help you sort through the details of each.
For example, if you want to live in a home for 5 years and location is your #1 bucket, you might have to make adjustments to your criteria in order to afford a home in that neighborhood. You might have to get a home that needs work so you don’t blow your budget. Or maybe you’ll need to buy a smaller home or condo.
This above example shows how adjusting your criteria – going smaller or not move-in ready – enables you to stick with your location and budget. That one bucket was adjusted so that you could hold firm on the other two.
This give-and-take in balancing or aligning the three buckets helps make your home search more methodical and organized. Most buyers have to make these adjustments while house hunting so don’t be disappointed if you do too.
Do You Need to Adjust Type of Home?
As you make adjustments to your buckets, you may have to change the type of home you initially thought you would buy. This is your “criteria bucket” and the “type of home” is a big one for it!
Once you’ve narrowed down a location and hold firm to that, you’ll have a better idea of what type of home can afford in that particular neighborhood. If you have your mind set on a different type of home, then you might have to rethink location (consider one with similar characteristics but with more affordable homes).
There are pros and cons to all types of home, and that is something to discuss with your agent who can help you sort through the details of each.
For example, a condo unit in a building can provide homeownership for less cost since you don’t have a yard. You’ll also benefit from some onsite amenities such as a pool or gym, maybe a doorman … but remember you will have to pay Condo fees. So you’ll need to factor in all the costs.
A townhome can give you a bit more privacy and independence compared to a condo but may cost more to purchase. In this type of home, you may be able to enjoy your small bit of yard. Plus, there is usually lower maintenance and cost than a detached, single-family home with the same interior space.
A detached, single-family home will give you the most independence but can be costly since it can require more maintenance both inside and outside. Are you ready for that responsibility?
If you see yourself living in a home for 5 years but not much more than that, buying a condo or townhome can be a stepping stone to a detached, single-family home. Again, discuss this with your agent and understand the outlook for your local market.
Now You’re Ready — House Hunting Basics
Now that you’ve got your three buckets balanced (or know how to keep adjusting them), you are ready to actually go see homes. And, more importantly, will have the confidence to put in an offer when you see one!
Here are basic tips for this part of the process:
Stay Organized and Focused Each Time. Keep a record of all your research and handouts on the homes you visit. It’s very important to set up a system that works for you so you can easily refer back to homes that day or the next.
Write down comments of your likes, dislikes and any other helpful, more detailed observations. Use a system that you know works for you, whether it’s on paper, in your Notes app or whatever. Do it as soon as you’re done or during a viewing. Did you get a positive first reaction walking in there? Did you enjoy the brightly-lit rooms? Did you smell odors from a nearby restaurant?
Don’t forget to take lots of pictures or videos to help jolt your memory when a day of house hunting is done. You’ll be amazed that you start to forget what you’ve seen in certain homes: beautiful hardwood floors, amazing fireplace or a view of a dumpster. Take a picture of the front door/home number of each home first so you know the pictures/videos that follow belong to that home.
If you do this, then you can then easily go through your notes and pictures to compare costs, neighborhoods, and home features. This also helps you stay focused on your needs and wants. And if you do need to make an offer quickly, you’ll have more confidence in your decision since you have your research right in front of you.
On the flip side, you’ll know what homes can be deleted from your list after you review your pictures and notes after a day of looking. Maybe a home was a “maybe” initially, but now that you have time to think again, you can move it to your “no” list. That way you’re all set for the next day of house hunting OR you’re ready to make an offer on a “yes” home.
Create a Schedule That Works for You. Make sure your agent is aware of your time schedule and expectations. Do you like to look at one or two homes in a session? Four? Eight? Weekends or certain weeknights?
Your agent can better serve you and any time constraints if you make these arrangements from the get-go. Your schedule also will be affected by your local market and if homes are moving quickly or not. You may need to up your pace so you don’t lose out on a potential home.
Don’t Forget to Ask for Drive-Bys. Don’t spend time driving around a neighborhood without a purpose! If you like driving around by yourself looking at homes, ask for a list of drive-bys or homes on the market you can consider from the outside (and at different times of the day and night).
If one appeals to you, then your agent can make an appointment to see the interior so you don’t just rely on Internet photos.
Many times, the outside, the street, the neighborhood is a deal breaker so just move on down the list.
Communicate With Your Agent (and Yourself). Honest communication is essential. Express your likes and dislikes after seeing a home. Don’t be afraid to tell your agent what you really think since they won’t take it personally … they don’t own the home!
If you are more open with your agent, then they will know your personality better and can identify homes that will appeal to you. They will get a better sense of what you are looking for after each visit when you are honest with them.
Never feel guilty or pressured! Even if you may see a home that is in pristine condition and move-in ready, don’t be afraid to say this isn’t the home for you if it doesn’t meet one of your “must-haves” for some reason.
Or, you may be interested in a home that’s a major “fixer upper” or is being sold “as is,” which means the seller has no intention to do any repairs. Your agent can help you determine if you are ready to undertake such a project in order to become a homeowner.
By following these smart house-hunting strategies and knowing your three “buckets,” you will find your new home in no time (and maybe have some fun along the way)!
Stay tuned for next week’s “Make Me an Offer” that Gets Results. You’ll get the rundown on figuring out your offer price, your earnest money deposit, and some clever negotiation tactics in this seventh article for my Buying a Home 101 series.