How to Avoid the Biggest Mistake?
The Internet has revolutionized the home buying process. There are literally 100’s if not 1000’s of sites to search for homes online, in your city, in Charlotte, or just about anywhere in the world. Finding the right house for you to call home should be easy, like the printer you bought on Amazon, or the shoes for your birthday. Why Zillow even has commercials telling you it is OK to decide on a home before you get there. How profoundly wrong is this? Let me count the ways!
Once you see the house, you learn what every other home buyer learns, photos can (and do) hide a lot, and every house has a flaw or two or three in it. And buying the house is more than the house too- you are buying the neighborhood, the schools that go with it, the potential re-sale value and more.
Do the online pictures show the flaws? Rarely. Another benefit of walking into a few homes in different neighborhoods is you start to discover the things you don’t want, and the things you can live within the neighborhood as well as the house.
That brings us to the first underlying key to making a good housing decision, choose your “neighborhoods of interest” first. Visit many of them, talk to people, and think about your requirements and preferences, and fatal flaws (bad school zone, too far out or in etc) And unlike the Zillow commercials,
if you want to avoid the biggest mistakes, search out your preferred and affordable neighborhoods first, then search for a house in those neighborhoods!
I recently showed a $600,000 home but it had a kitchen that any $1M home would have been proud of, a crazy cool kitchen and it seemed cheap when compared to others… Why so cheap? It looked amazing online and it was in person too, so why? It is on a rough street, one that is changing and a high property value would have been closer to $350,000, but absolutely not $600,000. These all too common neighborhood mistakes are especially but not exclusively made from shopping online. There is a tendency to fall in love with the house first, and then ask “What kind of neighborhood is it?” More than once, in fact very often home buyers buy a great house with a “neighborhood” problem. I include myself here. Today, home buyers will see a wonderful house online, and then go to the subdivision. Since they don’t see anything in the neighborhood they hate, they buy in.
But there is so much more to a neighborhood than a collection of houses. Is there a community? One that offers the residents some intrinsic value, why folks would want to buy here in the future, even when the homes are not new anymore? How is the commute? How are the schools? All of these questions bear on the underlying value of the real estate, and the staying power, or the ability to appreciate in the future.
In my case, I made this mistake long before the internet. It was buying a great property without any neighborhood to speak of when my children were young and my wife stayed at home. I have a social wife and it was clear within 18 months that as lovely as the house and property were, that what we had was a great house with a “location problem.” No matter how nice the house, if you choose the neighborhood unwisely, and then come to hate the neighborhood, you will be moving sooner than later, and that is a frequent and costly mistake.
All Houses Have Flaws But Home Buyers Have Preferences, Strong Preferences, and Fatal Flaws
Start with the fact that whether you spend $100,000 or $3M, all houses have flaws. However, there is a big difference between a flaw you can live with, and one you can’t. If you or your spouse can’t live with it at all that is a fatal flaw. We all have them. It seems the more homes you buy, the more “fatal flaws” you might observe. A good Agent will point out serious flaws as he or she sees them, it will be up to you to decide if it is a fatal one. But lets look closer, what is a Fatal Flaw? What do they look like?
A fatal flaw is a buyer perception, one that no matter how good everything else is, how spectacular everything else is, you can’t (or it would be a mistake) to buy this house with the fatal flaw.
It is always personal, it can be individual or shared. It could be a floor plan, for example it “we must have the master on the main,” it could be the street: “I don’t want to live on a busy street.” What makes it fatal, is that every other box could be checked, it is perfect in every way except…. That’s what makes it fatal. In my case, I didn’t consult enough with my wife (ladies I know you are amazed by this!) because if I had, I would have discovered that “being in a neighborhood with other young families” was not just a preference for my wife. Our lack of neighborhood, despite a spectacular house, pool, and outbuilding-it was a fatal flaw for her so we (ahem, I) had made a mistake, we bought a great house with a “no-neighborhood problem” for us.
I hope it is clear by now that fatal flaws are Not always obvious. Talk to each other! And look for the communities of interest first. Here is where the Zillow and others like them with great pictures pull buyers in and often contribute to the biggest mistakes. Frequently the buyer is “pre-sold” by the photos, and can miss the big or fatal flaw, what in fact is driving the price down. Very often houses with big fatal flaws will be excellent on the inside, and maybe everything else is good, so they seem a bargain. But that is the reason they are priced so attractively. In my case the lack of neighborhood “under priced” the house in my mind, it was a “steal” so we bought it. And moved less than 2 years later paying closing costs! This is doable, but an expensive option.
Finding the right home for you and your family
You must identify your neighborhoods of interest , and start your home search there with your 1) House requirements looking forward, at least your size and price(not just your last house), 2) Your strong preferences and preferences and 3) Discover and write out your (and any partner’s) fatal flaws. If a house has either of your fatal flaws, don’t waste time on it, move on. Move on! Had I known and understood my wife’s fatal flaws, we would never have looked at the house.
Your requirements looking forward is key, because in most cases you are buying for the intermediate future or long term. Many move up buyers instinctively know this, the 2nd or 3rd child comes along and they need more space. How much is a key question for each family. A transferee is coming to town with a rising freshman and junior in high school, leaving a beautiful 4000 sf home in the suburbs, do they still need and want the big house they are leaving behind, with 2 children leaving the home for college within 3 years? Some would, and some would not, but it should be a thoughtful choice, not a reflexive one.
So whats the formula for finding the right home fast? Pick your neighborhoods of interest first, then find the houses that fit your requirements, and offer as many of your preferences as possible, all the while identifying your(s) “fatal flaws” and removing those from your choices.
Extended families are full of people with bad real estate stories to tell, from houses that never sell to money pits that make the 1980’s movie seem quaint. No one wants to make a bad decision, but there are many forks in the road, so searching out and finding your neighborhoods of interest, thoughtfully considering your requirements, your individual fatal flaws, and that of your spouse or significant other, and eliminating those houses first , will go a long way towards making a good buying decision on your home purchase. So use the above formula to get started, but then I recommend you employ quality partners: a good real estate agent, and a good mortgage broker will help you through the process and add value to your decision making process. I will write more about this in the next post.
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