The "How To" in Home Purchasing

By:

The final sale prices of real estate in the Pacific Northwest continue to exceed record highs. Many of these follow multiple offers in amounts well over list prices. Although the media reports that this phenomena occurs in other parts of the United States, the reasons for it vary and are unimportant to buyers in this market.

Supply and Demand

Within the limited supply of homes for sale, well-maintained or recently updated homes are few. Interest rates continue on the low side, and proximity to the buyer's employer or community center incites greater willingness to pay for these valued features, even at premiums that baffle sellers and economists.

Your Options as a Buyer

In this market, you have two options: participate or don't. If you choose to participate, you'd best make a plan and stick to it no matter how many times you must withdraw from the competition for an attractive home, or how strongly you feel the temptation to purchase any property. It's not about defeating other buyers, it's about choosing a home you and your family will enjoy returning to each and every day.

Plan A, Step 1: The Power to Purchase

Purchasing power is much more than just knowing the dollar amount you can pay for a home. The power lies in two areas: understanding the differences between loan packages well enough to determine which loan is appropriate for a specific transaction; and the ability to live within a proposed monthly budget. It's best to know your purchasing power, not just before making an offer, but even before you begin to search for properties.

Note: Most of us undertake this task in our occupations, each time we present a new business plan or idea. Before we give the presentation, we prepare for questions from our partners or managers. We've already thought through the alternatives. We know whether or not they can be profitable. How is this any different than the acquisition and management of your home?

Plan A, Step 2: Assessing Communities

Once you have ascertained your purchasing power, you can identify the characteristics you want in a community or neighborhood. Why should you do this before considering the features you want in a home? If you start by looking at what your family needs from the community, you will always feel comfortable with your decision to purchase. On your own, you can do very little to influence existing schools, neighbors, parks, and amenities. It takes time, shared interests and the sensitivity of everyone living in the area to build a uniform sense of community.

Plan A, Step 3: Dreaming Your House

Buyers usually focus on this step sooner than is appropriate. New construction holds the attractions of freshness and possibility. The prices of newly constructed homes tend to be lower because the homes are located farther away from established neighborhoods (better value-per-dollar-spent, or yield). However, these distances may present you with commuting issues for employment, family activities and education. If a similar home is newly constructed in a popular and established neighborhood, the price for this home will be higher than for a home located farther away. This highlights the truth in the old real estate adage: "The three most important factors in buying a home are location, location and location!"

Consequently, it is very important to know what you want in a house. The number of bedrooms and bathrooms; presence of den or bonus room, and garage (detached or attached); size of yard; usable square footage of the house and how many stories; all determine the range of acceptability from the ideal to the minimum. Additionally, you should calculate how much time, effort and money you would feel comfortable spending to complete cosmetic changes, remodeling or refurbishing projects. You can visit your local Home Depot store to investigate the cost of painting an entire room, ask about the cost of repairing or replacing a roof, or check the price of a double-pane window to replace a single-pane. If you ask questions about these projects in advance, you will be able to take them into account while you are previewing houses. The care you take researching this matter will keep you from buying a house you can't afford—physically or financially—to maintain or improve.

Reviewing Step 1 will help you consider improvements and/or deferred maintenance work. Upon the completion of Step 3, you can set the minimum purchase price you are willing to offer.

Plan A, Step 4: Previewing for Comparison

With your prioritized lists of communities and house characteristics, (such as number of bedrooms and baths), and proposed maximum and minimum purchase prices, you can visit the Northwest Eddy™ property search page, enter the information in the search criteria fields and perform a search for each community in order of preference.

Compare the property information, pictures, and prices of the homes that result from your search. Select the top five properties and drive by them. Compare the information provided online with what you actually see when you drive by. Do the houses look better online than in real life? How do the houses compare with other houses nearby? Is this the community you wish to call home?

Repeat this step for each community on your list. You may find that in your price range, the existing homes in a specific community will not meet your requirements. If this is the case, you can make adjustments or changes to your plan.

Once you have identified your list-price range, and prioritized communities and house characteristics, you can contact your realtor. A knowledgeable and experienced real estate agent can provide you not only with information on communities, but with extensive data on the properties you have selected.

Return to The Search