Buying a Home 101 Series – Week 6

This step-by-step series will take you through the entire home-buying process — from finding a buyer’s agent to settlement day, and all the details in between. Every first-time buyer will find this information-packed series easy to follow and understand. Make sure to tune in for the next few weeks!

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 can 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 less stressful!

These search strategies will also help make it more enjoyable and easier overall. Better yet, you’ll have the confidence and ability to put in an offer and, ultimately, have a successful closing.

First, Understand the Process

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. As a first-time buyer, you don’t want to rush ahead to house hunting until you know about the entire process from beginning to end.

Check out How to Find the Very Best Buyer’s Agent in this Buying a Home 101 series for more details on working with an agent.

Next, Know Your Three “Buckets”

You want to house hunt with a plan and a purpose, and that’s where these three “buckets” play a key role – budget, location, and criteria.

Using this analogy of three buckets, 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 also important for you to understand the following two requirements before you start viewing homes:

• 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 others in your search for a home.

Undertaking this step and seeing how each is linked is essential! If you “pour” too much into one bucket, you’ll need to adjust another bucket, and so on.

For example, if you need to lower your budget, you might need to change the location if homes are more expensive there, OR you might have to consider getting a smaller home (fewer criteria) if you want the location to stay the same with that new budget. As you can see, one adjustment leads to another adjustment!

Looking at budget, location, and criteria in this way can help you find the alignment 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 Review 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. You should emphasize monthly mortgage payments before moving 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 requirements!)

You can review this budget process in two previous articles from our series: Do the Math – A Mortgage You Can Afford (LINK) and 5 Steps to Obtaining a Mortgage (LINK).

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 that the location of your home will affect everything about your lifestyle and day-to-day life – from whether it has urban conveniences or will mean a longer commute to work. So always keep that in mind.

First, figure out WHERE you want to live. 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 it’s important to you since it could be replicated in a similar, less expensive neighborhood. Don’t hesitate to look at other areas that weren’t originally on your radar; they might meet your needs and wants, too.

Consider factors that influence both your lifestyle and resale value. Does the neighborhood have good schools? Is the home on a busy corner lot? Revitalizing neighborhoods may offer bargains, but 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.

If you aren’t happy with the results, you’ll need to adjust your “buckets.” Decide whether it makes sense to change neighborhoods, tweak your budget a bit, or rethink your list of “must-haves.”

3. Criteria – What Do You Want and Need in a Home?

When we say criteria, we mean things like size, the number of bedrooms, and condition – aspects of the home itself that you require. These include both needs and wants.

You should have a written list of your needs and wants 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 easy to get sidetracked while house hunting 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’s important for your family and your future lifestyle. You might never find the “perfect” home, but deciding between needs and wants can help you focus.

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By following these smart house hunting strategies and understanding your three “buckets,” you’ll find your new home in no time—and maybe have some fun along the way! If you have any questions I am here to help. You can reach out at James.Daniel@KW.com

Stay tuned for next week’s Make a Winning Offer Without Going Overboard. You’ll get the rundown on figuring out your offer price, your earnest money deposit, and clever negotiation tactics in this eighth article in our Buying a Home 101 series.