Whether you’re hunting for an amazing apartment in a prime location or you’re searching for your first home to buy, finding a home that is a good value for the price is always a smart financial move.
As the legendary investor Warren Buffett once said, “Price is what you pay. Value is what you get.” This quote has also resonated with me because it can apply to so many facets of life. To one person, scoring a deal on a cheap item represents value; to someone else, investing in a quality item that lasts for years or decades signifies value.
In today’s personal finance guide, we share helpful tips on how to find a home that is a good value for the price.
1. Write a list of essential must-haves
As you begin your property search, write up a list of your must-haves, your non-negotiables, and the things you’re willing to compromise on. This will help you figure out what is essential to you, which enables you to better perceive value (as this perspective varies from person to person). When determining what’s “essential” to you, ask yourself the big “why” behind each must-have. Sometimes you’ll realize that some things aren’t as important as you initially thought.
As an example, in our recent search for a new place, my boyfriend was adamant about getting hardwood floors and stainless steel appliances. He also wanted to stay in downtown Carmel-by-the-Sea (which is notorious for offering small properties at high prices, many of which are outdated). While we love this charming town, it’s challenging to find a home that is a good value for the price here.
By contrast to my boyfriend, I didn’t care about the appliances in the kitchen or hardwood floors. In addition, I wanted a quieter setting with beautiful views and more space. As we toured one place after the next, we started to realize that downtown wasn’t offering the value we wanted, so we checked out another area (conveniently just 5 minutes away from downtown, but in a much quieter area of Carmel).
To our surprise, we found an updated place that offered twice the square footage of our current home, has a marble fireplace, vaulted ceilings, and a gorgeous ocean view. Needless to say, we instantly knew it was a good value for the price. While my boyfriend isn’t getting the hardwood floors and stainless steel appliances he wanted, he’s very happy with our decision, as there are so many other positive features that met (or exceeded) his original expectations.
2. Do your research
When looking to rent or buy a home, take your time to thoroughly do your research. Comparing one property to the next will help you see the pluses and minuses of each place, which gives you a better sense of which home is a good value for the price. In addition, it can help you negotiate a better deal since the market often drives prices. When negotiating deals, Realtors are notorious for referencing the “comps” (or comparable properties) in the surrounding neighborhood, by mentioning the price per square foot and other price-determining factors.
3. Set your budget
When it comes to setting your budget, James Molinaro III, a home loan officer for Woodbridge Financial in Monterey, California says “Don’t make yourself house poor. Make sure you can comfortably afford the property you’re going to rent or buy. Take into account utilities and insurance costs as well.”
Setting a budget will help you refine your search by limiting the number of properties you look at. It will also make you think about everything realistically, which helps you truly figure out what is important to you. Do you care about a convenient location? Are hardwood floors and stainless steel appliances must-haves? Or is your heart set on that spectacular ocean view? These are all factors to consider when establishing your budget.
4. Be patient
Being patient while looking for your next place is often challenging, but necessary. Since we often get emotionally attached to the idea of a property, we can get swept up in the frenzy of putting in an offer, and end up over-paying. That’s why it’s helpful to sleep on it (or even take a few days or weeks to evaluate the property from all angles). When the timing is right, you’ll know it. If you have a little faith and a lot of patience, the right home will become available to you. It’s also advisable to tour a few properties before deciding which is best for you (and your current budget).
5. Prepare your finances now
Even before you find your next home to rent or buy, preparing your finances now helps you get ready to make the big move. Since a large amount of money is often required up-front when renting a place (as landlords frequently expect the first month, last month and deposit due at time of rental), it’s advisable to save up now and get all your finances sorted out before starting your property search. The same goes with buying a house, as there are closing costs, unexpected fees, and down-payments that are expected when you sign the contract.
Before spending your next paycheck on those designer shoes, take a moment to think about what matters most – your wardrobe or your next home. If finding your next home is truly a priority, you’ll re-assess frivolous expenditures and decide to build up your bank account instead.
As you look for a home to rent or buy, consider these helpful tips to determine what good value for the price means. When you find a property that checks-off your must-haves on your list and seems like a good value in your mind, that’s the home to consider getting.
When looking for a home to rent or buy, what does “good value” mean to you?
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