You Know the House You Want to Buy

This book is full of practical, up-to-date information about the financial realities, legal rules, and real estate industry customs involved in purchasing a California house. Two crucial things, however, no book can tell you: the location and type of house you want to live in. No matter how many experts you consult or how many opinions you get, you and only you are qualified to describe your dream house and ideal neighborhood.

Given your family's needs, tastes, and finances, you probably already have a good idea of the type of house you want to buy. Indeed, if you sit quietly for a few moments, shut your eyes, and let your imagination go, you can probably conjure up an image of the house or, perhaps, if you're flexible, several houses that you would love to call home.

Because this is true, we skip the typical first chapter in many home buyers' books, in which the author compares such things as the joys of living on a dusty road in outer suburbia to the convenience of living in a townhouse in a major city. If you aren't focused enough to make these broad choices on your own, you may need to do some critical self-evaluation before beginning your home search.

Already found the house you want to purchase and are mainly interested in the ins and outs of financing? Skip the rest of this chapter and move on to Chapter 2, How Much House Can You Afford?

Don't Be Talked Into Buying the Wrong House

In today's high-priced market, most buyers face an affordability gap between the house they'd like to buy and the one they can afford. Without an organized house-buying approach, there is a good chance you'll be talked into compromising on the wrong house by friends, relatives, a real estate agent, or even yourself.

"Not me, I know my own mind," you say. "Nonsense," we reply. In today's market, almost everyone must trim their desires to fit their pocketbook. Every day, confident and knowledgeable home seekers become so anxious and disoriented that they leap into a deal they later come to regret, sometimes bitterly.

Here is our method to ensure that you buy a house you'll enjoy living in, even if it's substantially more modest than your dream house:

• Firmly establish your priorities before you look at a house.
• Insist that any house you offer to buy meets at least your most important priorities.
• Do this even if, in buying a house that meets your top priorities, you must compromise in other areas.

The reason this method works well should be obvious. If your priorities are clearly set in advance, you're likely to compromise on less-important features. If they aren't, you may become so frazzled by the house-purchase process that you buy a house that lacks the basic features that motivated you to buy in the first place.

In the following sections, we help you consider a range of house features, establish your priorities, and compare potential houses.

Identify Your Ideal House Profile

When looking for a house, it's easy to become overwhelmed by the array of choices, from size to style to floor plan and fixtures. Then, there's the issue of location -- houses come in all sorts of neighborhoods, school districts, and potential hazard zones (fire, earthquake, and flood, to name a few). And, of course, price and purchase terms are crucial considerations for most home buyers. To cope with all these and at least a dozen other relevant variables, it's essential to establish your priorities in advance and stick to them.

The first step is to identify house features most important to you by completing our Ideal House Profile, which lists all major categories such as upper price limit, number and type of rooms, and location. A sample is shown below, and a tearout copy is included in Appendix D.

If you're buying with another person, prepare your list of priorities together, so that each person's strong likes and dislikes are respected.

Getting price and financing information. Most people will have an upper limit on the house they can afford to buy and the maximum down payment they can make. If you need advice on these issues, be sure to read Chapters 2, 4, and 8 before completing the Ideal House Profile.

Must Haves: Mandatory Priorities

Use the Ideal House Profile to identify the essential features you're looking for (must have) in a house, such as a particular city or neighborhood. Since price is an obvious consideration for most people, fill in the top section first. For example, under Upper price limit you might note $600,000, with a Maximum down payment of $60,000. Then fill in the rest of the form.

If you have two kids, you might note that three bedrooms, excellent public schools, and a street with lots of children are "must haves." If you plan to live in the house after retirement, a minimal number of stairs and short distances to shops and services may be "must haves."

Pay close attention to the School needs category. Buying a great house at a great price in a lousy school district may mean years of paying for private schools. By contrast, paying a little more for a good house in an excellent school district may be a bargain in the long run. And if you plan to move in a few years, it will be easier to sell a house in a good school district, because that feature is important to many potential buyers. See Appendix A, Welcome to California, for advice on checking out schools

In most cases, it will be obvious where to note your priorities. For example, if extreme quiet is important (you don't want to be near a freeway offramp) or you want walking access to a park, list these under Desired neighborhood features. If you're not sure where to list a particular "must have," such as a hot and dry climate, ocean view, the siting of a house (feng shui), or garage parking, put it in the Other desired features category on the Ideal House Profile.

Hope to Have: Secondary Priorities

Once you've compiled your list of "must haves," jot down features that you'd like but aren't crucial to your decision of whether to buy. For example, under Type of yard and grounds, you might note patio and flat back yard in the "hope to have" column. Or under Number and type of rooms, you might list finished basement or master bedroom with bath.

Take a second look at your "Must have" column. If you're typical, you may wonder how you will ever afford a house with the features you've listed. Don't despair -- at least, not until you understand the strategies (discussed in Chapter 3) to help you buy an affordable house. For now, you might need to change a couple of "must haves" to "hope to haves."

Check out view ordinances. If you're drawn to a house for its great view, call the local mayor's or city manager's office and ask whether any view ordinance specifically protects a homeowner's rights to a view. Check whether local regulations require homeowners to trim trees to protect neighbors' views, too.

Absolute No Ways

Be sure to list your "absolute no ways" (you will not buy a house that has any of these features) at the bottom of the Ideal House Profile. Avoiding things you'll always hate -- such as a house in a flood zone, poor school district, or high-crime area -- can be even more important than finding a house which contains all your mandatory priorities.

If you're moving into a new-house development or condominium, be sure to check into covenants, conditions, and restrictions (CC&Rs), which may be quite detailed and restrictive on everything from the color of your house to your landscaping. (CC&Rs are discussed in more detail in Chapter 7.)

Once you've completed your Ideal House Profile, you're ready to create a House Priorities Worksheet, which will help you see how each house stacks up with your priorities.

Create a House Priorities Worksheet

Now it's time to use the information collected in your Ideal House Profile to create a House Priorities Worksheet for each house you visit.

Start by making several copies of this worksheet to allow for mistakes or the eventual scaling back of your priority list if it turns out you can't afford all the features you would like. Then, enter relevant information on a master copy of the House Priorities Worksheet under each major category -- "Must have," "hope to have," and "absolute no ways." A sample is shown below, and a tearout copy is included in Appendix D.

Once you have completed your House Priorities Worksheet to your (and your partner's) satisfaction, make several copies (or install the form on your laptop computer if you'll be taking it househunting). Take the worksheet with you each time you visit a house.

For each house you see, fill in the top of the House Priorities Worksheet. Enter the address, asking price, name and phone number of the contact person (listing agent or seller, if it's a For Sale by Owner), and date you saw the house. As you walk around each house and talk to the owner or agent, enter a checkmark if the house has a desirable or undesirable feature. Also, make notes next to a particular feature if it can be changed to meet your needs (for example, an okay kitchen that could be modernized for $25,000).

Add comments at the bottom, such as "potential undeveloped lot next door" or "neighbors seem very friendly." If you look at a lot of houses, taking notes such as these will help make sure you don't forget important information.

You should seriously consider only those houses with all or most of your "must haves" and none of your "no ways." If you visit a nice, reasonably priced house that doesn't come close to matching your list and can't be easily changed to do so, say no. Take the time to find a more suitable house; you'll be glad you did.

[House Priorities Worksheet] omitted for online sample chapter.

Set up a good filing system. As the list of houses you look at grows, keep track of the information you collect. Failing to adopt a good system may lead to revisiting houses you've already seen and rejected or making decisions based on half-remembered facts. For each house that seems like a possible prospect, make a file that includes a completed House Priorities Worksheet, the information materials provided when you toured the home, the Multiple Listing Service information, ads, and your notes. Or, if you are more digitally inclined, use your computer to set up a simple database with key details on each house you visit. (For advice, see "Organizing Your House Search" in Chapter 6.)

Prepare a House Comparison Worksheet

If, like many people, you look at a considerable number of houses over an extended period of time -- or even in the space of a week -- you may soon have trouble distinguishing or comparing their features. That's where our House Comparison Worksheet comes in.

Across the top of the form, list the addresses of the three or four houses you like best. In the left column, fill in your list of priorities and "no ways" from your Ideal House Profile and House Priorities Worksheet. Then put a checkmark on the line under each house that has that feature to allow for a quick comparison.

A sample is shown below, and a tearout copy is included in Appendix D.

Ellen: How not to buy a house. I was a first-time purchaser on a relatively tight budget when I set out to buy an older, attached row house in San Francisco. I wanted two bedrooms, no (or a very small) yard, proximity to a downtown bus route, and walking access to a neighborhood market and bookstore. I looked for many months at houses that were completely unsuitable, far too expensive, or, with depressing regularity, both. So I broadened my search by reading the classifieds in the Sunday paper. When I saw that prices were more reasonable in the suburbs, I spent a sunny Sunday afternoon browsing in Contra Costa County.

At the first open house I visited, I met an energetic real estate agent who spun a wonderful word picture of the joys of suburban life: lots of sun, room for a tomato garden, and friendly neighbors. She showed me a split-level house with an apple tree in full bloom in my price range. Almost before I realized what I was doing, I signed on the bottom line.

That was the fun part. Soon I was getting up at 6:00 a.m., driving to the train station, and standing for the 40-minute ride to San Francisco. My fantasy about the joy of suburban life was just that. It's hard to believe now, but I seemed to have temporarily overlooked the fact that I'm allergic to direct sun, detest tomatoes, and moved out of the suburbs to get away from overly involved neighbors.

Fortunately, I sold the house six months later, at a small profit. I went in with a friend and together we bought a house in San Francisco that meets my needs perfectly.

[House Comparison Worksheet] omitted for online sample chapter.