Real Estate Guide

Buying Your Home - Questions and Answers
'Finding the Right Home'

• How do I find the right home?
• What are the pros and cons of adding on or buying new?
• Do we dig deep and buy a dream home or settle for a starter home?
• How do you choose between buying and renting?
• How do I get the real scoop on homes I am looking at?
• What do all of those real estate acronyms in the ads mean?

How do I find the right home?

With all the choices in today's market, how do you go about finding the right home? It seems the more research you do, the more alternatives you discover.

It's important to visualize your needs and plan ahead. "Know what you want in a home, what's important to you, and what you can live without," Jack Pearce, ABR, Broker of RE/MAX Valley Real Estate, Boardman, Ohio says. "Many of us start out with a champagne taste and a beer pocketbook, so it's important to be realistic," he adds.

Where and what you buy will affect you for as long as you live in the house. "Get your priorities in order before you start looking or even talk to a real estate broker or sales associate," Pearce says.

For first-time home buyers this is a new experience, so it's especially important to do your homework. If you currently own a home, you know exactly what's lacking. You may need another bedroom or bathroom, or a good school nearby.

First, decide where you want to live. A big part of the answer hinges on where and how you earn a living. If your job requires a lot of reading or is quite stressful, public transportation may offer valuable time to sit quietly. "Regardless, you should practice the commute in rush hour before you make a commitment. A seemingly quiet road can transform into gridlock during peak hours," Pearce cautions.

People with children have other major considerations: school and safety. If you plan to send your children to private schools, you can live where you want assuming you can easily arrange transportation. On the other hand, a lavish public school system may indicate high local real estate taxes. Check them out.

Obviously, lifestyle is an important consideration. People who frequently dine out, go dancing and attend the theater probably belong in the city or a close-in suburb. "In other words, make sure you're in close proximity to the things that matter most," Pearce says.

It used to be that homes came in a limited variety, but today, you have many choices. In addition to the traditional single-family home, you can buy a townhouse, condominium or apartment condominium or co-op.

In planned unit developments (PUDs), you can find almost any combination. In condos and other such communities, make sure the rules and regulations, as well as the by-laws, match your lifestyle. This type of housing is great for people who want to own their own space without being responsible for mowing the lawn or repairing the roof; a management company handles that.

On the other hand, you'll pay fees for these services. "In addition to checking the documents and financial soundness of the homeowner's association, you must determine if the monthly fees are worth the services and additional amenities such as a swimming pool or exercise room," Pearce explains.

Affordability can be a factor not only in the type of housing, but whether it's new or an existing home. Old houses often have fine woodwork or interesting nooks and crannies not normally found in new homes. They generally sit on landscaped lots with mature trees and grown bushes.

New homes may cost more (more here), but you can make many more decisions on amenities, colors, carpeting and fixtures. "Make sure you're dealing with a reputable builder, and have an attorney review all documents, Pearce says.

Selecting a real estate professional is an important first step in beginning your search. "Ask for personal recommendations to find an individual who is knowledgeable about the neighborhood and has access to the local Multiple Listing Service," Pearce says. Make sure you feel confident about his or her knowledge and skills, and understand the business relationship that you have established between you.

Jack Pearce is one of more than 40,000 members of the Real Estate BUYERS AGENT Council (REBAC) of the NATIONAL ASSOCIATION OF REALTORS^® , who have attained the ABR^®, Accredited Buyer Representative, designation. As the world's largest association of real estate professionals focusing specifically on representing the real estate buyer. REBAC is "The Voice for Buyer Representation," with more than 44,000 active real estate professional members of the organization throughout the world.

Other RE/MAX Valley Agents with ABR credentials >> Click Here

What are the pros and cons of adding on or buying new?

Before making a choice between adding on to an existing home or buying a larger one, consider these questions:

• How much money is available, either from cash reserves or through a home improvement loan, to remodel your current house?
• How much additional space is required? Would the foundation support a second floor or does the lot have room to expand on the ground level?
• What do local zoning and building ordinances permit?
• How much equity already exists in the property?
• Are there affordable properties for sale that would satisfy your changing housing needs?

Do we dig deep and buy a dream home or settle for a starter home?

Choosing between a smaller house in an affluent neighborhood, an older, bigger house in a more working-class community, or a brand-new home is not easy. If you're in this situation, start by examining your priorities and asking the following questions:

• Is the surrounding neighborhood or the home itself the most important consideration?
• Is each of the neighborhoods safe?
• Is quality of the schools an issue?
• Do any of the areas seem to attract more families with children or adult residents?
• Where do you fit in?

As for the return on your investment, home-price appreciation is hard to predict. In the late 1980s, and again 10 years later, the more expensive move-up housing appreciated wildly. But during the recession that followed, smaller homes tended to hold their value better than more expensive ones. The same seems to be holding true in the current down market. Homes that are more affordable to the majority of the people tend to hold their value better.

How do you choose between buying and renting?

Home ownership offers tax benefits as well as the freedom to make decisions about your home. On the other hand if you rent, you don't have to worry about maintenance and other financial obligations associated with owning property.

There also are a number of economic considerations. Unlike renters, home owners who secure a fixed-rate loan can lock in their monthly housing costs and make prudent investment plans knowing these expenses will not increase substantially.

Home ownership is a highly leveraged investment that can yield substantial profit with very little upfront investment. However, such returns depend on home-price appreciation, and whether or not you are able take advantage of the tax advantages afforded homeowners buy itemizing your tax returns.

In terms of monthly money outlay, renting is almost always cheaper, even after taxes. However, the money saved by renting will almost never equal the gains that real estate price appreciation can afford the homeowner.

As for evaluating the risk associated with home ownership, David T. Schumacher and Erik Page Bucy write in their book "The Buy & Hold Real Estate Strategy," John Wiley & Sons, New York; 1992, that

"good property located in growth areas should be regarded as an investment as opposed to a speculation or gamble." The authors recommend that prospective buyers spend a few months investigating a community. Many people make the mistake of buying in the wrong area. "Just because certain properties are high-priced doesn't necessarily mean they have some inherent advantage," the authors write. "One property may cost more than another today, but will it still be worth more down the line?"

See Also >>

• Advantages of Home Ownership
• Rent vs. Buy Calculator

  Because of the social and financial advantages to homeowners such as tax breaks and appreciation, most financial experts advise homeownership or real estate investment as a part of most wealth building programs. However, homeownership isn't for everybody and sometimes renting can be the more prudent venue. OurValleyHomes'  "Rent vs. Buy Calculator" will point you in the right direction in choosing whether you are better off renting or owning your home.

How do I get the real scoop on homes I am looking at?

Disclosure laws vary by state, but in Ohio, the law requires the seller to complete a Ohio Residential Property Disclosure Form  which your agent will allow you to review and sign before you make your offer. Certain remedies are prescribes by Ohio's Disclosure Law that are available to the buyer should a property disclosure not be presented by the seller before you make your offer. Home inspections and your agent's experience will also be invaluable..

See Also >>

• For a summary of the seller obligations imposed by the Disclosure Law and your rights as a buyer under the law:

  See >> Selling Your Home - Whose obligation is it to disclose pertinent information about a property?

• For a summary of the type of defects that are covered by the Disclosure Law:

  See >> Selling Your Home - What defects does the seller have to disclose to the buyer?

• Selling Your Home - Disclosure

What do all of those real estate acronyms in the ads mean?

If you find yourself scratching your head over weird acronyms in a real estate listing or ad, don't be alarmed. There is method to the madness of this shorthand (which is mostly adopted by sellers and agents to save money in advertising charges). Here are some of the more veiled abbreviations and the meaning of each . . .

• assum. fin. -- assumable financing
• dk -- deck
• gar -- garage (garden is usually abbreviated "gard")
• expansion pot'l -- may be extra space on the lot, or possibly vertical potential for a top floor or room addition. Verify actual potential by checking local zoning restrictions prior to purchase.
• fab pentrm -- fabulous pentroom, a room on top, underneath the roof, that sometimes has views
• FDR -- formal dining room (not the former president)
• frplc, fplc, FP -- fireplace
• grmet kit -- gourmet kitchen
• HDW, HWF, Hdwd -- hardwood floors
• hi ceils -- high ceilings
• assum. fin. -- assumable financing
• large E-2 plan -- this is one of several floor plans available in a specific building
• lsd pkg . -- leased parking area, may come with an additional cost
• lo dues -- find out just how low these homeowner's dues are, and in comparison to what?
• pvt -- private
• pwdr rm -- powder room, or half-bath
• upr - upper floor
• vw, vu, vws, vus -- view(s)
• Wow! -- better check this one out.