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Your home may be your castle, but the past several years have proved that it's not the surefire investment it once was. It no longer makes sense to stretch your budget and buy the biggest and best home you can afford.
Plus, most people move about every five years, on average, says Don Russell, a Charlotte, N.C., real-estate agent.
"Don't try and build your dream house right off the bat," he says. "You don't want to live for your house when you're young. If you never have any money to go to the movies or — worst-case scenario — even Taco Bell, you are not going to be the loving couple you are today in five years."
But your home should meet all your needs. In this installment of "Real Estate on the Cheap," we'll talk to some agents about how to winnow down your list of wants to find a home that's just what you need — and nothing more. We'll also talk to an agent in the hot real-estate market of Orange County, Calif., to see if there's hope of finding a deal there.
Slide show: 12 things you can sacrifice to save on a home
(Do you have a question about "Real Estate on the Cheap," a suggestion for a future column or a story about how you saved money? Please email your ideas to msnrealestate@microsoft.com.)
- On our blog, 'Listed': Home as investment? That's so 2005
Is it a want or a need?
Real-estate agents have different ways of helping buyers pinpoint their needs. Chicago real-estate agent Neeti Arndt tasks buyers to name three things they do every day and determines their needs based on their responses.
"If my client drives to work every day versus taking public transportation, then a parking space becomes a need, versus a want," she says. "However, for my clients that don't use their car on a daily basis and live in a more urban setting, they need to think about if they really need that parking space, as those spots sometimes come with a $30,000 price tag."
Read: Should buyers take the plunge this spring?
Austin, Texas, agent John Crowe conducts a "lifestyle interview" with potential buyers. He also has them fill out a "home wish list" of features and amenities, as well as a survey about the type of neighborhood they are seeking. The lifestyle interview includes questions about children, interests, activities, pets, why they're moving, what their dream home would look like and features they love in their current home.
"Once that's complete, we go back through and identify the needs — budget, bedrooms, bathrooms, general location," Crowe said. "The best thing is to get them thinking practically so emotion is managed down."
Russell says he usually finds at least one need when he asks buyers what in their current home they dislike the most. "It doesn't matter of it's an apartment or a rental house; they will blurt it out," he says.
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Changing minds
Linda Walters, a real-estate agent in Wayne, Pa., says first-time buyers often come to her with an unrealistic list of what they want. But she says she treads lightly at first.
"You have to develop a rapport with them," she says. "You take their list and say, 'Let's see what we can do.' That's their dream, and you can't stomp on it the first time you talk to them."
As she gets to know her clients, she says, she'll talk them into looking at a home that doesn't have a master bathroom, for instance, and then asks questions about why they need an extra bathroom or bedroom. Sometimes, a buyer will realize that a room or feature is unnecessary. And Walters keeps pushing location.
"I've never had someone come to me and say the most important thing is location," she says. "They never put that high on their list. They want an updated kitchen and bath, a garage, large land."
Buyers will also bring Walters a list of homes they found online that have everything they need, but "there's a reason (the homes are) in their price range," Walters says. "It's a bad location, on a busy road, in a bad school district, has no basement. There's almost always a reason. The only way you can convince them that you know what you're doing is to take them out to these homes and point those things out."
Carson Cobb, a Raleigh real-estate agent, says 90% of buyers change their minds to some degree about what they want versus what they need after seeing just a handful of houses.
Cobb, who is part of a mother-and-son real-estate team with his mom, Debbie Cobb, helped Jon Weiner and his wife, Lindsey, make the distinction between needs and wants a few years ago. "The very first thing they asked my wife and I to do was to make a list of needs and wants," Weiner says. "They used that as a starting point, found some houses and showed them to us."
After a few homes, Debbie and Carson Cobb asked them to re-evaluate "what was important and what was simply nice to have," Weiner says. At first, "we were so focused on the interior that we basically said, 'Yard would be good, but we don't really care how big it is,'" he says.
But it turned out that the Weiners like their privacy, and a decent-sized yard became a need. "Looking out the window and seeing a house 20 feet away couldn’t work," he says. "The postage-stamp property wasn't going to make us happy, regardless of how nice the hardwoods might be."
They purchased a home that was smaller than what they originally thought they wanted, but "the slightly smaller house has everything we need and a little bit more," Jon Weiner says.
