Setting Your Homebuying Priorities – Price, Quality, Location: Pick Any Two

Around here we say that summer is the price we pay for affordable housing.

Oh, isn’t this the truth!! I was lucky enough to get a 1300 sq. ft. house within steps of Lake Erie, on ~1/5 of an acre, for just over $100,000.

The compromise? A 25 minute commute, and a *complete* gut of the house – an 82-year old, previously-rented (with the owner living out of town, so no one supervised ANY of the “upgrades”, hence my new roof which replaced one less than 7 years old, the insane wiring (what do you mean, the kitchen lighting is hooked up to two breakers??), and more).

Fortunately, my dad is doing most of the work, with my help, so economically, it makes sense. I’ll end up with a house worth somewhere around $200,000 (hard to estimate, since houses in this area go from a low of $50,000 to over one million – talk about location mattering!!), with a mortgage I can easily afford.

And most importantly – the land, which around here can be (almost) priceless!

I started saying this line to my Wife during our extended housing search. I would often also say you can change anything about a house except its location, so that is the one thing we should not give up. We ended up with a house at a good price, nice quality for its age, and in a very nice area that is centrally located, except on a busy street across the street from a cemetery. I will always wonder if we should have taken more of a fix me up on a quiet street.

I think this applies to apartment hunters too When I got my current place, I sacrificed on quality (an older building), but I got a good price and I’m in safe neighbourhood (which is very important to me!)

I completely agree. When we were in the market, it seemed it was a constant game of give and take in order to find a suitable home that wouldn’t involved going bankrupt or being more than an hour away from our jobs. Great points!

Well, my wifeI ended up sacrificing a little in the location and quality category. We wanted to live in a location that we had previously rented in, but you would have had to buy a 40 year old house for more than we were willing to spend.

Following that, we looked at our second choice of neighborhoods and settled there. The settling on quality over price comes in when we were refusing to spend $10,000 more on the first house that we put an offer on. The owner was not willing to come down. In fact, the owner’s first counter offer to us was $10,000 higher than the asking price. Crazy, right?

Anyway, we got the price and our second favorite location, but we ended up with a slightly smaller yard and kitchen. I would also consider the bathrooms to be better at that other house, too.

I do feel that we made the right choice, and I would gladly make the same choice again.

This makes me feel better about our house…we got good quality for the price, which was an amount we could afford, but the neighborhood is not our favorite place ever. We’re saving up to move in, oh, ten years, to a place where location and quality will be our two.

I think the problem that many people face is that they *think* they understand the scope of compromises that their budget forces upon them, and then act from that viewpoint, without regard for reality. Like the people on HGTV or wherever who insist that their starting home in a competitive market “must” have granite counters and stainless steel appliances. A lot of times when they don’t see that particular feature in their budget, they end up buying at a much higher price point than they originally were contemplating or spend thousands of dollars right after moving in to upgrade to these “necessities”.

When we looked at homes, we first dipped our toe into the market in November, and were being shown brand new 2000 square foot gorgeous houses. By April when we were ready to buy, prices had risen so much that we were only being shown 1800 sq ft older homes with lots of issues. If we stuck to our guns and insisted upon houses as nice as we’d originally looked at, we would have spent a lot more money than we could have afforded at the time. As it turns out, we made a lot more compromises, and ended up finding a much smaller but extremely well-priced home in a great town. While many people who bought in our time frame have lost money, our home has continued to appreciate.

Location, purchase price and property taxes guided my decision process. I might be able to afford the home, but not the high property taxes, especially if I was going to be there long term. I wanted a “fixer upper” because I knew the property value would increase faster than if I bought a designer house with all of the amenities. Some people don’t like doing the work or living in the house while it’s being done, but it gave me satisfaction to have counter tops precisely the color I wanted insteadof what the previous owners selected.

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JD

A big thank you for leading me to another gem of a website http://www.thomasjstanley.com.

I just read a couple of articles there and really really liked them.

Looks like a worthwhile website to spend my time.

When I bought my house I didn’t even ask my bank how much I could qualify for. I figured out what I wanted my mortgage payment to be, and worked backward from there. I got a good price, good location, and as for quality… it had very good bones . I’ve put a lot of work into it in the last 4 years, and I love how it’s customized now.

We used to have a saying at my college: “sleep, study, socialize: pick two.”

When we were house hunting in our town of 10,000, we looked at a house outside of town (half hour drive to town). It was at the top end of our budget, but was only 12 years old and definitely the nicest thing in our price range. We chose not to place an offer on it for a couple of reasons.1.Location: It would have required that we had 2 vehicles and a half hour commute to work, it would have isolated us from our friends and made it harder to participate in activities going on in town. 2. It was much bigger than we wanted. It was 4 bedrooms 3 baths and our family consisted of 2 adults and one dog. I just couldn’t bear the thought of the work as well as the costs associated with maintaining it. In the end we bought a house in town with 3 bedrooms one bath, a good sized yard and a view looking down at the lake and a view of the mountains. It was older, smaller and needed a lot more work than the other one, but it was cheaper, more suited to our current lifestyle, in a good location (and had a view!)

Another thing to consider, and I know this is hard to think about when you are young. Homes near public transit, libraries, and a grocery store are better than homes that are not. You can be disabled at any time. I know of an otherwise healthy 27 yr old who had a seizure and lost his license for 5 years — he lives in a beautiful country home and he’s dependent on his wife to drive him everywhere. A huge strain on their relationship.

I don’t know, if you choose a region that’s generally affordable, you can have all three. We have exactly the house we wanted, in exactly the neighborhood we wanted (though I would have preferred a less-busy street) at exactly the price we wanted.

It did take a long time looking, and our real estate agent kept pushing us to compromise on location, and kind of whining about how much of her time we were taking up.

We know we can’t afford Chicago or San Francisco or DC, but in our little city we can have exactly what we want.

@ Bogey #8, don’t be too quick to diss on “mobile homes.” Manufactured housing – new stock, that is – is often more soundly constructed than the mass-produced, quickly-built, barely-inspected “development” houses that went up in such unsustainable numbers in recent years.

And I’d also like to point out that manufactured housing does not necessarily equal living in some dire little trailer park on a rural highway. You can put one of them almost anywhere, depending on city codes.

I lived in a “mobile home” for most of my childhood, and manufactured housing is definitely a valid option for our retirement property. I would rather spend 200K on a big lot outside a small city, and put in a 60K prefab house, than spend 300K for a conventional house on a tiny lot in the same city.

Ha I thought of another triangulation I’ve been told. In academics if you want a career, I have been told you can have career, good relationship with spouse, children. Can do 1 well, 2 middling, and 3 is impossible. Maybe that’s why I’m not in academics anymore.

Location and price really intersect in a lot of ways. We bought a house on a busline that is also close enough to “downtown” that in pleasant weather it’s a pleasant walk. And there’s a park close enough to walk to, too. And our dentist, grocery stores, etc are all closer than they might be if we’d bought a house in a different neighborhood. It’s not just the work commute, but lots of other ways that location affects how much we spend every month.

Too true! This question of “two of the three” was recently reinforced for me when I visited a friend.

She & I bought houses 5 years ago for the same price. I bought a 1300 sf fixer-upper on a postage stamp lot in a good town 15 minutes from Boston. My friend bought a 3000 sf brand new house with tons of amenities more than an hour from Boston.

Before we bought a house, we sat down and made a list: “must have,” “would like,” and “don’t care”. That helped us get on the same page and made clear what we needed vs. wanted. As we hunted, that list was modified – primarily shifting some “must have’s” to “would like”, but also finding a new “must have” that, until we realized it, kept tripping up the search.

Some things will be more cost-effective in the long run: my “must-have” was being near “Tier 1″/regular (cheapest) public transit to Boston/Cambridge, which jacked the house price; however, our family now uses the T to get to school & work and our car expenses have plummeted (and we don’t need a 2nd car).

A contractor friend told me the #1 damage to a house is water; if your house stays dry, it’ll last nearly forever. If your dream house has signs of water damage, plan on making extra repairs. And if it’s on a flood plain, you need flood insurance, a sump pump, and someone to call to remove sewage from the basement after a bad storm.

Last, always get a house inspection from a reputable inspector. Ours cost $400 and we negotiated $8000 from the purchase price as a result. (Overall, though, our house is sound – well-built and dry as bone.)

As someone nearing retirement with a job that has kept us overseas for over 30 years, this is a very welcome post. We plan to retire near family in the outer outskirts of Baton Rouge, LA. I regularly research websites for homes in that area and much appreciate this article and the subsequent comments, and plan to send a link to members of a retirement group I moderate.

Can anyone suggest ways to locate a reputable realtor? We hope to buy our retirement home in the next two years and pay it off before retiring. I would very much like to establish a relationship with a realtor soon, but have no idea how to find one. Any suggestions?