Do you plan to start shopping for a house soon? If so, you probably have a very specific vision in your head. You can see the architectural features, the layout, and the view from the bedroom window.
There’s nothing wrong with this kind of visualization. In fact, it’s a necessary part of the house-hunting process. It helps you identify the features you want from a house. It helps you create a wish list. But there’s something you need to know before you start shopping for a house. You probably won’t find a house that matches the vision you have in your head. You may find something close, but it’s going to involve some compromises.
Here’s a diagram that illustrates my point. These circles represent the primary criteria that home buyers use when shopping for a house — price, size and location. It’s rare for all three of these circles to overlap.
Shopping for a house is all about compromise. There’s a good chance you will have to compromise on one of three circles above. For example, you might find a house within your price range and located in your first-choice neighborhood. But it’s a bit smaller than you prefer. Or you might find a house that’s the right size and price, but located outside of your desired area.
If you go into the home-buying process with unrealistic notions about what you can afford, you’ll only end up frustrated and disappointed. But if you go into the process with a willingness to compromise, you’ll have an easier time finding a house that meets most of your needs.
Priorities When Shopping for a House
It’s extremely rare to find a house that checks all of the boxes on your wish list. That’s why it’s called a “wish” list. So be flexible. Prioritize your wish list with the most important items at the top. For example, if you need a house with at least three bedrooms to accommodate your growing family, then you shouldn’t compromise on the number of bedrooms. But you might have to compromise on the location or the price of the house. It’s a question of what you need versus what you want.
Let’s talk more about the three circles shown in the diagram above…
1. The Price of the Home
In order to get all of the features you want in a house, you may have to spend more money than you anticipated at the start. This is one of the most common compromises when shopping for a house.
You have a specific location in mind. You have a minimum requirement for square footage, and the number of bedrooms and bathrooms. And you have a certain budget in mind. But these three factors don’t always align the way you want them to. In order to get the space you need in a location you want, you may have to spend more than expected.
The important thing is that you don’t take on a mortgage loan that’s too big for you. It’s okay to stretch your budget a bit, if you have the resources to back it up. But if you don’t leave yourself some financial breathing room, you are setting yourself up for failure. At best, you’ll be “house poor” with a reduced quality of life. At worst, you’ll end up in foreclosure down the road.
There’s a difference between being flexible and foolish. Flexible means you’re willing to spend a bit more than you anticipated, while staying within your means. Foolish is when you take on a mortgage loan you simply can’t afford.
2. The Location of the Home
Everyone wants to live in a desirable area with good schools. This improves your quality of life and supports your property values. But the most desirable areas are typically the most expensive. So you may find you need to compromise with the location of your home.
Again, it comes down to your priorities. If you are most concerned with the location, but less concerned with the size of the house, you may be able to compromise on square footage in favor of the location. But if size is a higher priority, you may have to broaden your geographical shopping area to get the square footage you want.
3. The Size of the Home
We touched on this compromise earlier. In order to find a house within your budget and in your desired location, you may have to compromise on the square footage (and/or the number of bedrooms and bathrooms).
This is when you need to think about your long-term plans. Are you planning to start a family? Do you expect to be in this house for many years? If so, you’ll have to choose a house with enough square footage to accommodate a growing family. You’ll need some space to grow into. Otherwise, you’ll be in a position where you have to move again in a few years.
On the other hand, if this is a starter home that you only plan to stay in for a few years, you can be more flexible with the square footage. The same is true if you have no plans to grow your family. Think about your long-term plans, and choose a house that will support those plans for the foreseeable future.
Honorable Mention – The Architectural Style
Earlier, I talked about the vision you have in your head. You can probably see the type of house you want, right down to the last architectural detail. This is only natural. Shopping for a house is just as much emotional as it is practical. You want to buy a home that you find visually appealing.
But when you start the house-hunting process, you will be limited by availability and affordability. You can only choose from homes that are on the market at that particular time. And you have to stay within your budget as well. These two additional circles — affordability and availability — may not align with the style of house you want. So you may find that you need to compromise in this area as well.
Refer back to the diagram at the top of this page. Keep it in mind as you start shopping for a house. Think about your long-term plans and your priorities. Be flexible. Be willing to compromise. If you do these things, you’ll have an easier time finding the right home. Good luck!