Thursday, August 22, 2013

House-Hunting Tips

Finding a house can be overwhelming. How do we know? We've been through the lovely process twice: once for our condo in Birmingham in 2009 and again this spring in Little Rock.

Like most young professionals, we had a tight budget. We had the added joy of being completely unfamiliar with the city to which we were moving.  Oh yeah, and we were living 5-6 hours away from Little Rock, so we couldn't just go drive around and look at houses in the evening.

Here's what we learned (most of it the hard way)...

1) Find a good realtor.  This can be hard if you're new to the area.  We were moving for my residency, so we talked to my boss to get a recommendation.  We depended on our realtor heavily to help us decide which house had the best investment potential. A good realtor can show you what meets your criteria and help keep you realistic.  They're also very good at estimating potential travel times to work, giving restaurant recommendations, and knowing who to call when there's a drainage problem and you have no idea what contractor to call. It's all well and good if you call the top, best-selling agent in the country, but it's more important that whoever the realtor is understands your vision: if you want a fixer-upper that you can flip, they probably shouldn't want to show you planned communities in the suburbs. Also, remember: using a realtor to buy a house costs you nothing.

2) Know what you're willing to compromise on. You will compromise on something. Probably lots of things. Get used to the idea.  We looked at a lot of houses in the areas closer to downtown (great commute for me). It was the type of place where you could walk to some things and have a cutesy, little 1920's bungalow. The downside? They were cutesy, little (TINY!) 1920's bungalows: no garage, tiny kitchens, and weird layouts from years of remodeling on top of remodeling. (Ex. you have to walk through bedroom #2 to get to bedroom #3. Weird.) After living in our shoebox-sized condo, we were not willing to compromise on space, so we ended up a little further from downtown (still < 15 minutes for me), but got a house with a yard and a garage (and every 1970's decor relic known to mankind).  If you're on a limited budget, you will probably narrow the search down to two types of houses: a newer, large house with great finishes out in the suburbs or an older, smaller, dated house in a desirable established neighborhood. (So you will be compromising either on finishes or on location.) When you've made your millions, you can buy an updated character home with a landscaped lawn in the heart of the cutesy area.

3) Buy the most dated house on the best street.  You've probably heard, "Buy the worst house on the best block." A variation on the theme.  However, woe be unto the buyer of the "worst house on the block" who finds out it's the worst because the foundation is crumbling, there is no central HVAC, and the siding is falling of the house.  Take-home point: buy a structurally sound, horribly dated house.  This way, every dollar you spend will be seen buy a future buyer; if you spend $8000 on an A/C, a buyer is probably not going to care or pay extra for it, but if the house has good structure, you can spend the $8000 on new hardwood and tile, which someone would likely pay for.

4) Become familiar with  Instead of being limited to just one realty, this website shows you all the house registered for sale, along with every statistic about the house and the neighborhood you can imagine: price per square foot,  listing history (both are great negotiating tools),  school zoning, everything.  I still check it frequently to see how our neighborhood's market is doing... and to see pictures of what quickly-selling houses look like on the inside.

5) Think about resale. Yes, even before you buy the house, think about having to sell it.  If you think the street is loud, a future buyer will too;  if you think the house is worth less than the asking price because of the weird layout, so will someone else; if you think 45 minutes is a long commute, someone else probably will too.  We looked at one house that had been a four-bedroom, but they took down one wall to make a huge third bedroom. This worked perfect for us because it could be Grant's office/music room. BUT in the back of my head, I was thinking about the expense of adding that wall back because four-bedroom homes are generally worth more.  Always think about how a potential buyer would view your house.

6) Keep emotions out of the negotiating.  There are plenty of houses out there if these sellers are not willing to negotiate.  You'll likely overpay for the house once you've envisioned your family growing up there and planning how you would re-do the kitchen.  A house is a financial investment, so you need to make a rational decision based on the facts- not based on emotions.  Did I get emotionally attached to our house to the point that I would have been crushed if we didn't get it? Yes. Don't do that.

Happy house-hunting!


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