I make my living as a real estate agent. That means I earn a commission every time I help someone buy or sell a home. So I never want to discourage anyone from moving when they’re really ready. But until that time arrives, here are five facts all home buyers and sellers should know.
1. Don’t move if you don’t have to.
Think about this: moving can be expensive. Not only financially, but emotionally. Consider the love, time and energy you have invested in your present home. Then, consider what it may cost you to move your family and your furniture somewhere else.
There are also costs to obtain a mortgage, taxes, title fees, and 30 more years of mortgage payments. And, if you’re like most of us, you’re going to be buying lots of new stuff for your new home.
Naturally, if you have to move, whether it’s for a job, or because your children have grown up and moved away, or you just want a larger home because now you can afford it and you feel like it’s time, then by all means, make that move.
2. You don’t have to buy the biggest home on the block.
That home may look like the best one around (and it may be). But the bigger the home, the higher your expenses. More space means more electricity will be needed to generate the heating or cooling systems. It also means more time cleaning, more walls to paint, and more furniture to buy in order to fill the space.
So when you’re out with your real estate agent, consider the real needs of your family. For example, let’s say you’re a four person family of two adults and two children and you’re looking for five bedrooms. If you’re running a business out of your home, it may be that you and your and wife both need an in-home office.
Think about what you really need
But if you don’t work out of your home, maybe you don’t really need that many rooms. A smaller home means less expenditure up front and lower mortgage payments.
So you might want think about the 3 bedroom with a separate dining room that will be largely decorative that’s for sale two blocks away. You could divide that area and save a good deal of money on your purchase.
Something else to keep in mind: a bigger house means more things to worry about, kind of like children. The smaller they are, they less you worry. As they get older and larger, there are more problems that they may encounter. It’s the same with a house.
When it’s smaller it’s more manageable. When it’s really big, there are more pieces to worry about.
Expect to fix things
So as a rule, try to purchase a home that you know you can comfortably manage. In all homes, there’s always an occasional item that needs to be repaired or replaced. Like the garage door. Or maybe you’ll need new windows. Or a hot water heater.
All these things happen to houses. So expect an occasional fix-it, and try to find a house where those fix-its won’t seem like such a big deal when they happen.
And if you ever need something repaired or replaced, please call me and I will give you the name of someone reliable who can take care of it.
3. Your house does not have a guaranteed rate of appreciation.
We’d all like to think of our homes as nest eggs and investments in the future. The definition of an investment is something that generates income.
A house, while you live in it, typically generates expenses. You make mortgage payments on your home every month. You have taxes, utilities, lawn care, and other items that must be taken care of, all of them a necessity.
Wait…maybe it is an investment, after all
Down the road, selling the home you own may net you a profit. Is it certain? No. However, if the market is not in a boom cycle when you buy, if the neighborhood has remained relatively stable in price appreciation, and if you keep your home in good condition, your chances of selling at a price above what you paid are pretty good.
Despite the large jumps in the market that we experienced during the boom years of 2003 – 2006, home price increases over the past 40 years have averaged just over 5% according to the S&P Case Schiller Index.
In the meantime, treat your home like the treasure it is – it provides you with a wonderful place to live and raise a family, with all its pleasures and memories.
And while you live there, the return you can count on every year will be your own enjoyment in having a home to call your own, plus the annual tax refunds on your mortgage and house taxes. Hmmm…that’s starting to sound a lot like a very good investment.
4. Buy a home you can sell.
I say this to every buyer I work with: “Buy this home with the intention of selling it.” As much as you may be taken with the property, think hard before you purchase.
Why? Because home buying is subjective. That means not every home appeals to every buyer. But when the home has universal appeal, it’s likely to have a large audience. When the home has unusual features, the potential audience drops appreciably.
A personal example of what could have been a big mistake
Years ago, while looking for our very first home, my wife and I were sure we had found the perfect place. Solid house, 3/2, 2 car garage, new kitchens and baths, and get this: a working blue and green mosaic tile fountain shaped like a large fish in the front entryway.
We knew we’d never see anything like this again. We were hooked and ready to buy. We drew up the contract and made an offer.
After we got home that night, we couldn’t stop talking about the house and how unique it was. Then it hit us: it was this unique feature that had kept the house on the market for a very long time. And that once-in-a-lifetime fountain would make the house a very difficult place to sell 5 or 10 years later. So we cancelled. With no regrets.
Avoid unique. It doesn’t sell easily.
Unique or unusual features can be eye catching and thought provoking, but their appeal is very limited. Homes that appeal to a small portion of the population will sit on the market for a very long time, or may have to be sold at a big discount.
Homes that are universally appealing will sell quickly and easily. Buy one of those, because you are going to want to sell it someday.
5. Consider your short and long term needs before you buy…
If you’re just a couple now but you plan to have children, then that stunning and well priced two bedroom home may not be a good decision for you. It may be better to purchase the three bedroom that needs some work.
Or maybe you have children who are grown and just about to leave for college. Rather than moving to a home as large as the one you’re selling, it may be time to think a bit smaller. After all, those children may not be spending as much time at home in the near future.
Think long range
What kind of home will work for you over the next five or ten or even twenty years? While none of us can predict the future, it’s a good idea to have a long term house plan in mind when you’re thinking about purchasing a home.
While I hate to make this suggestion, you may want to consider renting a home if you don’t think you’ll be there for more than two or three years.
However, if you know the house is in an area that is rapidly appreciating, then by all means, buy for the short term, with the intent of making a nice profit within a relatively short time. (Don’t move in less than two years, however, or you’ll be hit with a capital gains tax on the profits).
…and before you sell.
What kind of home are you in today? If you’re in a single family house and you’re empty nesters, you may prefer a condo where everything is taken care of outside the home.
Maybe you’ve been in a condo and you’ve been eager to do your own gardening all these years. Well then, you may want a house with at least a small piece of lawn you can call your own.
Or maybe you’ve got a house full of memories that you want to keep nearby, but it’s just the two of you. A smaller house with a two car garage that allows you some storage room could be the answer.
Whatever your plans are, we can help.
If you’re thinking of buying or selling a home in Boca Raton, Boynton Beach, or Delray Beach, please call us at 561-213-6139.
Marc Jablon, the Jablon Team
Re/Max Complete Solutions