When, Where & What To Buy

BY STEVEN CHAN

he mantra often heard when purchasing a home, “Location, Location, Location,” has usually lived up to the promise of creating home equity and a positive return at a future date. The delivery of financial rewards through a home purchase can sometimes be stumbled upon, but usually, it’s developed through thoughtful planning, research, and negotiation.

When considering a new purchase, a list of variables, such as location, taxes, entry price, and now in some communities— wastewater options, are decisions that will follow a transaction for decades.

For those hesitating, you can argue that prices are too high, mortgage rates are prohibitive, and waiting could yield a significantly better opportunity once housing inventories improve. And, in fact, to some degree, all points may be correct, but, at the same time, housing prices have leveled, demand remains high, and often, the home you sell should produce enough equity to make a purchase, with little if any borrowing. Finally, if you’re not turning over stones and looking for a fabulous deal, you’ll never know if it was scooped up by someone else. Today is a great time to make any investment because if we have learned one thing, timing doesn’t work all that well when purchasing real estate.

As time passes, people’s life circumstances change. Families grow, move, disperse, and downsize. College-bound children leave an empty nest. Assessing the next ten years is a good measure for helping decide what category you should look into. City, historical, country, or contemporary chic? The choices are many, and much can be said for architectural beauty, modern conveniences, access to entertainment venues and friends, or the peace and tranquility of a farm.

In reality, a factor in every case will be the carrying—costs of a home—often overlooked—these expenses can initially be reasonable but potentially spiral out of control.

Across New England and beyond, communities blend well; one can seamlessly cross from one town to another, never realizing they’ve passed through an invisible border. What can be shocking is how tax valuations can fluctuate between homes within a neighborhood. Differences are usually due to public services offered, quality of school systems, tax base, type of housing, and the spending of tax revenue.

Items that can also impact your taxes include improving your property, having a view or living near the ocean, being a seasonal owner rather than a year around resident, and a townwide revaluation.

Understanding variations in property taxes between towns is significant; often, leaving options open or finding a home a block or two from a townline can save thousands of dollars per year.

Another important issue is municipal utilities, water, and sewer in particular. Most cities provide such services, while the suburbs can be hit or miss. The benefit of being hooked into the system is that you are responsible for services from your home to the street where they connect, but after that, you are not liable for repairs or replacement.

However, you are entirely liable for maintenance and function if you have a well or a septic system. Recent news about homeowners on Cape Cod and areas of the SouthCoast of Massachusetts learned they might be facing problems with the presumption they are contributing to Nitrogen being released into the nearby waterways. Those purchasing a home in these areas could soon feel the pain of the expenses needed to upgrade or completely replace systems.

This problem will not get solved or improved overnight; focusing on these first locations could be a warning to all other coastal areas; the worse is yet to come.

Living on the coast has always been of interest, and it continues to be attractive, but an issue that has caused havoc in obtaining insurance is how underwriters outline what constitutes a coastal property. Being near the ocean or a waterway was obvious, so rates were often commensurate with risk. But in the last few years, if you live miles from the shoreline, you’ve been penalized from the threat of wind from the ocean. Rates have risen well beyond what could be considered expected price increases, and in some cases, they have doubled even if you have never had a claim.

Condominiums are a popular choice for people who have busy lives or are not interested in doing or managing their home’s maintenance. But this is an option that comes with a different set of rules. Too often, a family buys a unit, whether free-standing or connected to others, and quickly learns of the many restrictions that govern how they will live. Most shocking to new owners is the difference between what used to be an owners’ “yard” and what they discover is “Common Area” owned by the development’s Homeowner’s Association.

When purchasing a unit in a community run by a board of directors or management company, it is vital to understand precisely what you will own and, more importantly, how you may use it!

There are benefits to condo life; just about everything is taken care of for a monthly fee, but if you think you’re going to grill at 7 a.m. on Sunday morning in your bathrobe, maybe you should consider owning a home in a location that doesn’t enact rules surrounding privacy or lifestyle choices.

Another cost of home ownership is that of regular maintenance. Lawn care, snow removal, painting, repairs, replacing windows, updating HVAC systems, a new roof, and so on. Often, a family qualifies for a mortgage on their home of choice, only to struggle with the expenses to keep it running once the overhead increases or unpredicted expenses arise.

Recently, buyers hoping to score a home of their choice have tried to entice sellers to accept their offer over another by eliminating home inspection. The belief that it would make an offer more attractive is accurate, and many homes have been bought without the assurance of condition. But, this is risky on many accounts. First, you will likely need to consult with your bank or mortgage company since they are your ‘partner’ in the purchase until you pay off the loan. And for those making a full cash offer, unless you’ve got experience and knowledge that allows you to judge a home’s condition, you could be making the biggest gamble of your life.

The most critical piece of the home buying experience is where most savvy home buyers and investors end up; in the office of a real estate broker or agent. Without good representation, those ‘winging it’ may find themselves disappointed and regretful.

Having experience on your side during a negotiation can make the difference between winning and losing; it only makes sense to find a company to sit in your corner. Take the time to build a relationship with a professional that aligns with your perspective and objectives.

Happy house hunting. H