Updated: Oct 8, 2018
Determining your WANTS from your NEEDS.
There are so many things to consider when buying a home that you can quickly get caught up in a million tiny details and lose track of what’s most important.
Remember key differences between wants and needs.
As with many situations in life, it’s important to separate your needs and your wants when looking for a home. Sure, it would be wonderful to find an amazing home that checks all of the boxes in both categories, but that is unrealistic. Even if you fall head over heels in love with a certain property, there will likely be at least a few things (even if they are minor) that you would change about the place if you could wave a magic wand and make it happen.
To help focus your search, it may be helpful to actually create a chart where you list your main Needs and Wants. By contrasting the two categories, you can identify the top priorities so you know where you can make compromises—and what items are non-negotiable.
Ideally, the perfect home for you would meet most or all of your Needs, along with many of your Wants. It’s even better if the items the property lacks are things that would be relatively easy to change or add.
Some of the basic features you will want to contemplate when evaluating homes:
Location: Everyone knows the old adage when it comes to real estate—it’s all about “location, location, location.” But there is no one perfect location that will be great for everyone. This is an individual decision. You may want a certain location because it is in your desired school district, or because it is close to your workplace. If you absolutely must focus on (or avoid) specific areas for important reasons, this would fall under your “needs” list. Finding the perfect neighborhood isn’t easy, but worth it!
Size: At the very least, you probably have an idea of how many bedrooms you will need to accommodate all of your household members. The bare minimum—both in total square footage and number of bedrooms or other spaces—your family would need in order to live comfortably would be your “needs.” Extras that would be nice to have to provide additional entertaining space or potential for expansion later would likely be considered “wants.” Don’t forget: the larger the home, the more expensive it will likely be to maintain.
Safety concerns: You may decide that living near a busy street is too risky with young children in the household. Family members with mobility issues or physical challenge might make a first-floor bedroom a must. Anything related to safety usually falls under the “needs” category.
Condition: You cannot change the location of a home, and even adjusting the size may be difficult or nearly impossible, depending on the layout of the home and the limitations of the property. But you can change the condition. The question of course is how much money, time, and effort are you willing to invest to accomplish that? A key factor will be determining whether the condition issues are cosmetic or structural. Things like undesirable paint colors or dull floors are easy to address, but a faulty electrical system isn’t quite such a simple fix. If you have skills in certain home repair or maintenance areas, you may be more comfortable buying a home that needs attention in those areas as opposed to other issues that would require you to hire a professional.
Know how to calculate when to move.
If your current home doesn’t meet enough of your needs and wants—or used to, but is no longer a good fit for your family’s present structure or demands—you may be considering making a change to a different home.
There’s no simple formula for determining when it might be too soon to sell your home. Ideally, you want to have at least some equity built up with your current home, but that will depend on a number of factors such as how much of the principal you still owe on the home and any changes to the local market that may impact the value of the home.
A good place to start is by evaluating your current loan and figuring out your remaining principal, and then comparing that with what you may realistically be able to get by selling your home. Your real estate agent will be able to help with that. Don’t forget to factor in the costs associated with selling a home and relocating to a new one.
You also should consult with your accountant or financial advisor about the tax implications of selling your home at a given point in time, particularly with regards to capital gains taxes.
Making a move to fix a bad choice is sometimes smart.
If you regret buying your current home, don’t be too quick to decide to move. Consider whether there are changes you can make to this home to make it more agreeable or comfortable. If there are deal-killers such as the location or the fact that it isn’t affordable within your budget, moving may be the smartest option. But avoid repeating your mistake—take care creating your Needs vs. Wants chart, and pay special attention to the things you ignored or overlooked when picking the home you are in now.
One major task that should come early in the home-buying journey is finding a good real estate agent, one whom you trust to guide your through the entire process. A real estate agent who gets to know your family’s goals and dreams for your new home can also help you narrow down your checklist and think about the things that are truly important to you.
Article courtesy of Trulia.