What's Next?

Once you've decided you're ready to buy, it's time to figure out what's important to you. In the next chapter, we'll discuss how to examine and settle on your priorities regarding types of houses and neighborhoods.

CHAPTER 2.

What Do You Want? Figuring Out Your Homebuying Needs

Meet Your Adviser Paul Grucza, a community association expert and educator, author, and TV show host based in Coppell, Texas.

What he doesWith 29-plus years of real estate-related experience, Paul is an active faculty member for (and former President of) the Community Associations Institute (CAI, at www.caionline.org), which provides nationwide guidance and resources to the volunteer homeowners who govern community associations. Paul received CAIs 1999-2000 Educator of the Year award. Hes also a Regional Vice President and Corporate Trainer for RTI/Community Management Associates, Inc. in Plano, Texas (www.cmamanagement.com), which provides professional management services for a variety of planned communities.

First houseIt was an absolutely rundown but gorgeous Mission-style bungalow built around 1922, in one of the first incorporated subdivisions outside Buffalo, New York. The house was the builders model for that subdivision, so it had all the features, including inlaid floors, woodwork, and leaded glass. I spent the next 11 or so years lovingly restoring it-regrouting the bathroom tile, refinishing the woodwork, rebronzing the heat duct covers, replacing the modernized light fixtures through a restoration company, and much more. It turned out to be the most beautiful home Ive ever owned.

Fantasy houseThat would be a 5,300-square-foot combination Frank Lloyd Wright and modernistic house on a cliff or hill overlooking Newport Beach, California. I would fill it with 1950s or early 1960s period furniture. And it would be a technologically smart house-with voice-command lights, A/C, and garage door, all cutting-edge. Why 5,300 square feet? I had a house in Florida that size once, and it was comfortable-anything bigger feels overwhelmingly large.

Likes best about his workMy daily interaction with a wide variety of people. They include homeowners, developers, service professionals, managers, and board members. This brings me more joy than anything-and after nearly 30 years, Id better enjoy my work!

Top tip for first-time homebuyersRegardless of the type of property youre looking for-whether a house, a condo, a cabin, a doublewide, or whatever-leave your emotions at home. Look at the property and its practical application in your life, and at what it will cost to turn it into your home.

You know you're ready to buy but are probably wondering, "Where do I start?" There's a lot to think about, like what kind of home or neighborhood you want, and what features you can't possibly possibly live without. This chapter will help you: live without. This chapter will help you: * identify neighborhood characteristics that fit your personality and that maximize house-resale value* understand how your lifestyle and plans should play into your choice of house* learn the benefits and drawbacks of different types of properties (single-family houses, condominiums, or co-ops, plus new or old places), and finally* create a Dream List, describing and organizing your priorities, to use when house shopping.

Later chapters will teach you how to do the looking, how to figure out whether you can afford what you want, and what to do once you've found a place. For now, focus on organizing your thoughts and priorities.

Test Your Knowledge of Famous Neighborhoods Match these famous neighborhoods to their descriptions:

Answers: 1-d, 2-e, 3-a, 4-c, 5-b.

Know Your Ideal Neighborhood: Why Location Matters

If you're a lifetime renter, you've probably always thought about location in the short term, knowing you could move at the end of your lease. Buying is different: You're committing yourself to a location for at least a few years. And you'll probably feel a sense of investment in your community that you didn't before. So get serious about identifying your location preferences, then make sure these preferences won't mean buying a house with low resale prospects.

Neighborhood Features for Daily Living

Not everyone wants the same features in a neighborhood, and you're the one who's got to live there. Before letting anyone else tell you what the best neighborhoods are, consider your preferences and priorities regarding: * Character and community. Character and community. For some, the uniformity of well-planned developments is pleasing; others enjoy the variety of older, one-of-a-kind homes. Visualize your ideal neighborhood, whether it features trees and parks or restaurants and bars. For some, the uniformity of well-planned developments is pleasing; others enjoy the variety of older, one-of-a-kind homes. Visualize your ideal neighborhood, whether it features trees and parks or restaurants and bars.* Safety. Safety. While most everyone prefers less crime, safety often comes with a tradeoff. For example, a rural neighborhood might be safe, but a city's resources and nightlife will be very far away. While most everyone prefers less crime, safety often comes with a tradeoff. For example, a rural neighborhood might be safe, but a city's resources and nightlife will be very far away.* Resources and accessibility. Resources and accessibility. Think where the important places and resources in your life are, like your workplace, child's school or day care, grocery stores, health care providers, public transportation or major roadways, cultural amenities, and more. How much time are you willing to spend traveling to those places? Think where the important places and resources in your life are, like your workplace, child's school or day care, grocery stores, health care providers, public transportation or major roadways, cultural amenities, and more. How much time are you willing to spend traveling to those places?* Schools. Schools. If you're planning on sending children to public schools, the quality of nearby schools will be important. If you're planning on sending children to public schools, the quality of nearby schools will be important.* Zoning and other restrictions on owners. Zoning and other restrictions on owners. If you want the freedom to remodel your home, you'll have to be in an area that allows that. Or, if you appreciate community uniformity, you'll like living somewhere that limits the changes owners can make to their houses or property. If you want the freedom to remodel your home, you'll have to be in an area that allows that. Or, if you appreciate community uniformity, you'll like living somewhere that limits the changes owners can make to their houses or property.

This isn't a complete list, and you should think about features that are unique to your needs. For example, adviser Bert Sperling notes, "If you're lucky enough to be a stay-at-home parent, you may find yourself lonely during the day if you have to travel a considerable distance to find some community for you and your youngsters."

Neighborhood Features That Boost Resale Value

When it comes to the long-term value of your home, location really does does matter. If you have a desirable piece of property that's also in a desirable location, more people will want to buy it. That keeps its value relatively high compared to nearby homes in less sought-after locations (which people may buy partly because they can't afford anything else). matter. If you have a desirable piece of property that's also in a desirable location, more people will want to buy it. That keeps its value relatively high compared to nearby homes in less sought-after locations (which people may buy partly because they can't afford anything else).

They Call That a House?

You won't believe what people live in! Here are a few creative houses:* The Golden Pyramid House in Wadsworth, Illinois: The largest 24-karat gold-plated object ever created.* The Shoe House in Hellam, Pennsylvania: Just what it sounds like-in the shape of a work boot, made of light-colored stucco and featuring shoe-themed stained-glass windows in every room.* A live-in water tower in Sunset Beach, California: from the 1940s, converted to a three-story house.

Not surprisingly, many of the features that attract first-time homebuyers boost resale value, like high-quality schools, low crime rates, convenient amenities, and neighborhood character and community. Another major factor affecting resale value is conformity. Buying a house that's much bigger than the houses around it is usually a bad idea. That house will appreciate at a slower rate, because buyers drawn to a neighborhood of smaller homes won't be able to afford the larger home, and buyers drawn to larger homes won't be drawn to that neighborhood. And if a house is just too unique-because the owner has customized it too much-it's going to stick out like a sore thumb.Finally, try to get an idea of whether a neighborhood is up and coming. You can tell by looking at whether there seems to be a lot of remodeling, new landscaping, or trendy-looking shops. Bert Sperling adds, "If you read the signs correctly, you could get in on the ground floor of the next hot new neighborhood."

Know Yourself: How Your Lifestyle, Plans, and Values Affect Your House Priorities

Later in this chapter, we'll show you how to prepare a Dream List to help you find the right house. Before making your list, reflect on what you want the house for. (To live in, duh, we got that.) Although it may be hard to imagine where your life will be in a few years, do your best to consider: * Who is going to live in the home? Who is going to live in the home? You may be on your own now, but in the future, might you bring in a roommate, significant other, child, elderly parent, or pet? If so, factor this into your priorities for things like number of bedrooms, quality of the school district, or availability of outdoor space. You may be on your own now, but in the future, might you bring in a roommate, significant other, child, elderly parent, or pet? If so, factor this into your priorities for things like number of bedrooms, quality of the school district, or availability of outdoor space.* What do you plan to do in the home? What do you plan to do in the home? If you plan to work at home, spend a lot of time in the kitchen, or entertain frequently, plan adequate space for that. Conversely, consider whether you really need to spend extra for a huge gourmet kitchen if you eat takeout every night. If you plan to work at home, spend a lot of time in the kitchen, or entertain frequently, plan adequate space for that. Conversely, consider whether you really need to spend extra for a huge gourmet kitchen if you eat takeout every night.* What does your lifestyle require? What does your lifestyle require? If you travel for business, you might want the convenience of a condo with easy airport access. Or if you're into nightlife, you might want to be able to stroll home and crash at 2 a.m. If you travel for business, you might want the convenience of a condo with easy airport access. Or if you're into nightlife, you might want to be able to stroll home and crash at 2 a.m.* How do you like to spend your time at home? How do you like to spend your time at home? Do you love the idea of remodeling an old home or creating a beautiful garden? Are you scared to death of anything that hints at the word "handy"? If you'd rather be throwing a cocktail party than mowing the lawn, the big house in the suburbs may not really be right for you. Do you love the idea of remodeling an old home or creating a beautiful garden? Are you scared to death of anything that hints at the word "handy"? If you'd rather be throwing a cocktail party than mowing the lawn, the big house in the suburbs may not really be right for you.

Look for a house with scope for my artistic side. A graphic designer and yoga teacher, Diane had wanted to buy a house for years-but knew it would be a financial challenge. She says, "I scraped together enough to buy a small cottage, with a disastrous backyard-and I turned it into my art project. I painted those white walls celery green, brick red, and tan. I spent all winter pulling weeds, then put in flagstone and flowers. And eventually I sold it for a large profit-enough to buy a duplex, so now I'm a property investor!" A graphic designer and yoga teacher, Diane had wanted to buy a house for years-but knew it would be a financial challenge. She says, "I scraped together enough to buy a small cottage, with a disastrous backyard-and I turned it into my art project. I painted those white walls celery green, brick red, and tan. I spent all winter pulling weeds, then put in flagstone and flowers. And eventually I sold it for a large profit-enough to buy a duplex, so now I'm a property investor!"

"Where Could Could I Be in Five Years?" I Be in Five Years?"

Instead of planning where you think you'll be in five years, why not play "Where could could I be in five years?" Try it with a friend or partner over a glass of wine, or while walking in the park. You'll have to be a little realistic-do you I be in five years?" Try it with a friend or partner over a glass of wine, or while walking in the park. You'll have to be a little realistic-do you really really think you'll win the lottery?-but optimistic, too. You may see yourself finding a better job in another city, or having your first baby. Imagining the possibilities can help you not only define your housebuying objectives, but see how those goals fit into your life's priorities. think you'll win the lottery?-but optimistic, too. You may see yourself finding a better job in another city, or having your first baby. Imagining the possibilities can help you not only define your housebuying objectives, but see how those goals fit into your life's priorities.

Know Your Ideal House: Old Bungalows, New Condos, and More

You probably have a vision in your mind of the house you want, whether it's a cozy cottage with fruit trees; an elegant brick townhouse with no yard; or a modern, glass-enclosed loft with views of the city. For an overview of your options, read on. (And when you're reading the bios of our advisers in this book, take a peek at their fantasy houses!) Of course, where you live will play a huge role in what you can buy. For example, in Chicago or New York City, you may be looking at apartments in high-rise buildings, while in less urban areas, most of the homes may be single-story ranch houses or newly built homes within developments.

Isn't my house classic? The columns date all the way back to 1972.Cher, Clueless Clueless

Would You Like Land With That? Single-Family Houses

You wouldn't think we'd have to define "house," would you? But since a number of different house types are available, let's be clear about what each one is. Technically speaking, a "house" is a detached, single-family dwelling. When you own a house, you own both the structure and the property that it sits on, all by yourself. Your house won't be attached to the next one, and you won't be cursing an upstairs neighbor for stumbling across the floor at 3 a.m.

Even if you know you want a house, however, an important question remains-new or previously lived in? Each has its own benefits and headaches.

CHECK IT OUT.

Interested in house styles? To decide whether you prefer a "Colonial," a "Victorian," or an "Italian Renaissance," look online at sites such as: To decide whether you prefer a "Colonial," a "Victorian," or an "Italian Renaissance," look online at sites such as:* www.architecture.about.com (search for "house styles") (search for "house styles")* www.oldhouses.com (click "Old House Style Guide") (click "Old House Style Guide")* www.wikipedia.org (search for "List of house styles"). (search for "List of house styles").

Old (or Not-So-New) Houses: Benefits and Drawbacks

If you're in an uber-urban area or your price range dictates it, older houses may be all that are available to you. Or you may just prefer a touch of historical charm. Either way, you'll get all these benefits: * Affordability. Affordability. Older homes tend to cost less to purchase than new, customized homes. (Though this isn't a universal rule-in large cities, where the majority of new building is far outside the city, it can be the reverse.) Older homes tend to cost less to purchase than new, customized homes. (Though this isn't a universal rule-in large cities, where the majority of new building is far outside the city, it can be the reverse.)* Established neighborhood. Established neighborhood. Instead of looking at mounds of dirt while perusing architectural drawings, you'll be able to get a feel for the neighborhood by taking a stroll. Instead of looking at mounds of dirt while perusing architectural drawings, you'll be able to get a feel for the neighborhood by taking a stroll.* Established landscaping. Established landscaping. You're not likely to find a tree-lined street, or a wisteria arbor over your front gate, in a new development. You're not likely to find a tree-lined street, or a wisteria arbor over your front gate, in a new development.* Construction. Construction. Older homes are often built with high-quality materials such as thick beams, solid-wood doors, and heavy fixtures. Older homes are often built with high-quality materials such as thick beams, solid-wood doors, and heavy fixtures.* Character. Character. Crown molding and built-in cabinetry are just a few of the fun features found in older homes-but rarely in newer homes. Crown molding and built-in cabinetry are just a few of the fun features found in older homes-but rarely in newer homes.

There are also drawbacks to previously loved homes, including: * Lower resale value. Lower resale value. Older homes, on average, sell for less than their newer counterparts. Older homes, on average, sell for less than their newer counterparts.* Replacement costs. Replacement costs. The years take a toll on appliances, water heaters, and roofs-and replacing them isn't cheap. The years take a toll on appliances, water heaters, and roofs-and replacing them isn't cheap.* Efficiency. Efficiency. Older houses tend to be less energy efficient than newer ones. Older houses tend to be less energy efficient than newer ones.* Style. Style. Although you can probably switch out the former owner's unique style choices (like magenta bathroom tile), it may require a fair amount of sweat equity (meaning Although you can probably switch out the former owner's unique style choices (like magenta bathroom tile), it may require a fair amount of sweat equity (meaning your your sweat builds equity). sweat builds equity).* Layout. Layout. Older houses were built for another era ... an era before plasma screen TVs and home offices. Rooms may be smaller and laid out differently than you'd like. Older houses were built for another era ... an era before plasma screen TVs and home offices. Rooms may be smaller and laid out differently than you'd like.

Of course, not every used home is old old. If you buy one that was built only a few years ago, some of the drawbacks described above will be eliminated. Likewise, you'll lose some of the benefits.

Newly Built Houses: Benefits and Drawbacks

Nearly 1.6 million new homes are built in the United States each year, often in planned communities or developments. (Of course, you can always buy a piece of land and build a custom home-but that's a different book, with its own unique set of issues.) No surprise-buying a new home has unique benefits, including: * It's mine! It's new! It's mine! It's new! A new house is a blank slate, clean and virtually untouched. A new house is a blank slate, clean and virtually untouched.* It's custom-built. It's custom-built. Although most builders offer a limited choice of floor plans, you usually get to define details like paint colors, flooring, and fixtures (though good taste comes at a price). Although most builders offer a limited choice of floor plans, you usually get to define details like paint colors, flooring, and fixtures (though good taste comes at a price).* All the modern conveniences. All the modern conveniences. New houses are built for today's lifestyles, so you'll be able to find features like a three-car garage, great room, or high-speed data lines. Also, you shouldn't have to worry about replacing a water heater or roof anytime soon. New houses are built for today's lifestyles, so you'll be able to find features like a three-car garage, great room, or high-speed data lines. Also, you shouldn't have to worry about replacing a water heater or roof anytime soon.* Livin' green. Livin' green. New houses are generally more energy efficient than older homes, so per square foot, you'll probably spend less money on things like heating and cooling costs. And with some searching, you might find a "green builder" who uses environmentally friendly building techniques and materials (see the U.S. Green Building Council's website at New houses are generally more energy efficient than older homes, so per square foot, you'll probably spend less money on things like heating and cooling costs. And with some searching, you might find a "green builder" who uses environmentally friendly building techniques and materials (see the U.S. Green Building Council's website at www.usgbc.org).* Community planning. Community planning. Many new homes are built in Planned Unit Developments (PUDs). Like condominiums, PUDs often have rules and amenities like swimming pools and community centers. If you like the conformity and resources you often get from a community association, but want the privacy of a detached home, a new home in a PUD might be a perfect compromise. Many new homes are built in Planned Unit Developments (PUDs). Like condominiums, PUDs often have rules and amenities like swimming pools and community centers. If you like the conformity and resources you often get from a community association, but want the privacy of a detached home, a new home in a PUD might be a perfect compromise.

But buying new also has these drawbacks: * It costs HOW much? It costs HOW much? New houses are generally worth more, but they tend to cost more, too. Developers often offer unique financing alternatives (discussed in Chapter 7), which may make a new house purchase more affordable. New houses are generally worth more, but they tend to cost more, too. Developers often offer unique financing alternatives (discussed in Chapter 7), which may make a new house purchase more affordable.* Who's this guy?! Who's this guy?! You might have to deal with the developer's salesperson or representative, without the benefit of your own real estate agent to protect you. You might have to deal with the developer's salesperson or representative, without the benefit of your own real estate agent to protect you.* Not time-tested. Not time-tested. While it's exciting to get a brand-new home, you'll be the first to discover whether all the lights work, the dishwasher runs, the water heater heats, and more. While it's exciting to get a brand-new home, you'll be the first to discover whether all the lights work, the dishwasher runs, the water heater heats, and more.* It will be done It will be done when when?! Developers don't always finish houses when they expect to, and often don't compensate purchasers for the delay. Instead, the fine print may release them of liability. Developers don't always finish houses when they expect to, and often don't compensate purchasers for the delay. Instead, the fine print may release them of liability.* More rules? More rules? As we'll discuss when we get to condos, some PUDs require all owners to live by a set of written rules. Short of selling, there's often little you can do to get out of these rules if you don't like them. As we'll discuss when we get to condos, some PUDs require all owners to live by a set of written rules. Short of selling, there's often little you can do to get out of these rules if you don't like them.

Sharing the Joy, Sharing the Pain: Common Interest Properties

Maybe a traditional house isn't for you-perhaps it's out of your price range, you're looking to avoid all the maintenance, or you want to live in an area that just doesn't have many regular houses. In that case, you may want to consider an alternative, like a condominium ("condo") or co-op.

These types of properties are often referred to as common interest developments (CIDs), because they involve shared ownership or responsibility for common areas like hallways, recreation rooms, or playgrounds. How a place looks physically doesn't really make a difference-any of these three might look like an apartment, flat, loft, or townhouse; old or new; in the city or the country. (Houses in PUDs count too, but since we've already covered those, we won't include them in this section.) Are you picturing yourself out on the roof with a hammer, doing your share for the common good? Don't worry, you won't likely be asked to perform repairs or fix elevators. But you will will have to become a member of a community association, which makes sure those things are done. Your monthly membership fee will help keep common areas in good shape and provide a cash reserve for unanticipated or larger projects like replacing a roof. If you want to actively participate in the association, you can attend meetings and voice your opinion-or even get yourself elected to the board of directors. If you don't, you just write the check and hope the more active owners are like-minded. have to become a member of a community association, which makes sure those things are done. Your monthly membership fee will help keep common areas in good shape and provide a cash reserve for unanticipated or larger projects like replacing a roof. If you want to actively participate in the association, you can attend meetings and voice your opinion-or even get yourself elected to the board of directors. If you don't, you just write the check and hope the more active owners are like-minded.

There are three types of community associations: planned community associations (for PUDs and townhouses), condominium associations, and co-op associations. We'll point out any significant differences among them as we go.

TIP.

What the association leaders do. Though every CID homeowner must join the community association, the board of directors handles the day-to-day work and decision making, such as coordinating repairs and collective services like trash pickup; managing amenities such as swimming pools, playgrounds, and tennis courts; preparing annual budgets; and conducting meetings. Though every CID homeowner must join the community association, the board of directors handles the day-to-day work and decision making, such as coordinating repairs and collective services like trash pickup; managing amenities such as swimming pools, playgrounds, and tennis courts; preparing annual budgets; and conducting meetings.

Condominiums: Benefits and Drawbacks

When you buy a condo, you buy the interior space of your home. Your walls, ceiling, and floors define your boundaries instead of fences and sidewalks. Everything in the common space-be it stairwells, swimming pools, sidewalks, or gardens-the whole community owns together and is financially responsible for. Some of the benefits of condo life include: * Affordability. Affordability. A condo often costs less to buy than a house (although in major metropolitan or resort areas, the opposite is sometimes true). Maintaining a condo can also be less expensive, since costs that otherwise might be duplicated-like landscaping, roofing, and some insurance-are shared. A condo often costs less to buy than a house (although in major metropolitan or resort areas, the opposite is sometimes true). Maintaining a condo can also be less expensive, since costs that otherwise might be duplicated-like landscaping, roofing, and some insurance-are shared.* Convenience. Convenience. If you aren't into maintenance, you'll appreciate that the condo association-particularly in a larger complex-is likely to hire a management company to take care of the common areas. You may also get valuable on-site amenities like a gym or pool. If you aren't into maintenance, you'll appreciate that the condo association-particularly in a larger complex-is likely to hire a management company to take care of the common areas. You may also get valuable on-site amenities like a gym or pool.* Community. Community. Because you're all part of the same community association, you'll get the opportunity to know your neighbors, whether you wish to or not. Because you're all part of the same community association, you'll get the opportunity to know your neighbors, whether you wish to or not.