Happy SMART Day Everyone!
Our first home in Colorado Springs, CO
This last weekend Thom and I spent time with good friends that are looking to buy a new home. In case I haven’t mentioned it before, both Thom and I have been real estate brokers for over 25 years (yikes! Where does the time go?) While Thom works exclusively with commercial properties, I mainly keep my license active in order to use that knowledge for my writing career. Plus, it comes in handy for personal use and sometimes to help friends or family. After showing our friends about ten homes in different areas, it occurred to me that based upon my experience, I could offer some tips to anyone who wishes to buy a home in a SMART (sustainable, meaningful, artful, responsible and thankful) way. So here are my seven tips to do just that!
#1 Honest Assessment; Before looking at a single house sit down and figure out what you can easily afford in a monthly payment. Pay no attention to what the bank (or your real estate agent) says you qualify for—I’m talking about what you can pay and not feel stressed about. Make sure that the payment amount includes your entire monthly nut, and stick to that amount. It might seem redundant to mention it—but I can’t tell you how many people get into trouble when it comes to figuring out how much they will be required to pay every month.
#2 Boundaries; Only look at homes that you can purchase that fall into that payment requirement. If you begin looking at homes that are more expensive than what you can easily afford, you will start setting yourself up for disappointment when looking at homes in your price range. You will also start rationalizing why you might be able to afford just a little more. As human beings, we can easily get attached and want things slightly out of our reach. Instead, ask your agent to show you homes below your price range. Suddenly your price range will look pretty good—or at least you will learn to realistically appraise homes-to-be in your price range.
FYI…This issue is actually one of the big reasons for the recent housing crash. Far too many people bought homes that they couldn’t afford in a normal real estate market. Instead of buying homes as a place to live and eventually pay off—people were using their homes as a way to leverage and make money. Lenders were giving out loans for just about anyone who was breathing (regardless of their income or financial worthiness). Prices went up until they were so high the whole “scheme” crumbled. When over-financed buyers eventually realized they couldn’t make their payments (duh!) they walked away. But make no mistake, the stress of committing to a loan that you really can’t afford might get you a bigger/fancier house today, in the long run it isn’t worth it. Even if you can walk away, the emotional toll on your life is very high.
#3 Just Because You Can—Doesn’t Mean You Should; Before you buy, sit down with people who have owned at least a couple of different homes and ask them how much it REALLY costs to own a home. I have a family member who was able to get a loan through the VA. While the VA offers a great benefit to those who serve in the military, it doesn’t really advise them on the total costs of owning a home. Not only did my family member buy a home within a few days of being stationed in a new location, this young couple is now strapped to a home mortgage PLUS all the costs that come with home ownership. Every home has utility costs (which are going up in case you haven’t noticed), taxes, insurance, maintenance, and thousands of little costs that we seldom take the time to figure out. While it might sound romantic to own a home—just because you can—doesn’t mean you should.
# 4 Choose your battles; Thom I have owned 12 different homes since we got married. While I have learned something about every property we have lived in and I believe gotten better at every selection—every single home we have ever purchased was a compromise of some sorts. Seldom does any home contain every single thing you would like to have on your “list.” That’s why it is so important to take the time to discover what is REALLY important to you before you purchase something. Sometimes you won’t even know what’s critical until you see it and recognize it. Unfortunately, it’s too easy to get romanced into one or another home and buy it—only to realize you should have considered all the elements.
Our first home was on the corner of two very busy streets. Thom and I told ourselves that it really wasn’t that bad. It was. Although we had a nice yard, we couldn’t even use it because it was so noisy. On the other hand, that first home was a duplex—it brought in over half the monthly payment amount, and at the time that was critical. The price also fit into our budget (with the help of the tenant) and although it needed work, was something we were able to buy. Because we were able to purchase the property at a good price in a good market, we actually made money on it when it came to sell. Before you buy weigh all the pros and cons.
#5 Don’t get attached: or romanced by any one house. If you walk into a house and fall in love—watch out! The minute you can’t live without any one house, you will overpay and drive yourself crazy at the same time. Now I’m not saying that you shouldn’t like the house you want to purchase—just don’t fall in love with it! We humans tend to over-identify with things we own and start projecting our entire worth and lives into the things we process. You are not any house you do or do not own! While a home can be a sanctuary, as well as a place of comfort and peace—those qualities come from you. Ultimately, the best thing about any property is the consciousness you bring with you—so don’t overly invest (emotionally, financially or spiritually!) into any property—especially when in the buying mode.
#6 One practical tip; Buy the best location that you can easily afford. Much of the time people will focus on a bigger house or more amenities—but if our experience in our owning homes, and in the houses we’ve bought and sold for friends means anything—then location, location, location. The reason that location remains such an important element is that most of the time you will appreciate your purchase more when it’s in as good a location as you can afford AND your resale abilities will stay as strong as possible. If you buy right going in, you can always get out if you need to.
#7 ALWAYS another house; I know that it is challenging to stay detached to a home that you think is perfect! In fact, the more perfect you think the house is, the harder it will be to keep it all in perspective. But please consider that even though you may have looked at dozens of homes until you found one you REALLY like, new homes come up on the market every single day. If something doesn’t work out and you are unable to get the home you like at the terms you like—don’t stress out. There is ALWAYS another house around the corner. And when it comes down to it—that other house around the corner might be even better than the one you lost.
When Thom and I bought our last home, we probably looked at nearly 100 houses. Okay, that was a bit excessive. But one reason why it was important was because we were making a life change to “right-sizing” our life and going as sustainable as possible. We did make a couple of offers on a couple of homes while we were looking and thank goodness, those deals fell apart for one reason or another. Looking back it would have been a mistake if we had bought those other houses instead of being patient until this home became available. That’s why I am offering a bonus tip of—
#8 BE PATIENT! Don’t rush the process.
Buying a home to live in can be immensely rewarding. It can also be quite a bit of work and even challenging. That’s why finding a good real estate agent (and no I’m not looking for THAT job!) is pretty important. It doesn’t cost you anything to work with an agent when you buy a house—but they can either help you reach your goals—or push you into something that isn’t good for you. That’s why it is very important to feel comfortable with the person you do select.
When it comes down to it, buying a home is similar to every single experience we have here on planet Earth. Some of it’s really good and some of it’s challenging. The only thing you can count on for sure is that it will be a learning experience. It won’t necessarily make you any happier, or feel more loved, or even give you a sense of pride. But it will provide you with a place and an experience to explore and learn who you really are and what’s important to you. That of course, is very SMART indeed.
“I long, as does every human being, to be at home wherever I find myself.” ~Maya Angelou
“You never know what events are going to transpire to get you home.” ~Og Mandino
P.S. If you are interested in learning more about the home buying or home selling process—particularly in California, I encourage you to read my book: The Complete Guide to Selling Your Own Home in California available on Amazon at: http://www.amazon.com/Complete-Guide-Selling-Your-California/dp/1933990163
Great advice Kathy! Thanks again for helping us find our home!
You are sure welcome….and thanks for letting me help you! Now how about that refinance????