All homebuyers enter the market with a budget, along with a list of “must-haves” and a list of “like-to- haves” in their next home. Buyers aim high, and they should; however, with a budget as the ultimate constraint, nearly all homebuyers realize (or come to realize) that they will have to be flexible and trade-off or compromise some things on their lists in order to get others. In the end, it’s about getting the optimal combination of features at the best possible price.
When you think about it, any particular property is simply a collection of attributes that, in aggregate, dictate market value. The relative importance of each attribute will, of course, vary from buyer-to-buyer (and sometimes between spouses), which is why every $500,000 home is not worth $500,000 to every buyer with a $500,000 budget. The most obvious property attributes considered by the typical homebuyer include:
The $500,000 you are prepared to spend may get you that charming renovated Virginia Highland bungalow, but it will be only 1,300 sf, with a small yard, no basement and no garage. That same $500,000 gets you a renovated 2,500 sf brick ranch in Sandy Springs on a finished basement, a half-acre lot and a 2-car garage. $500,000 in East Cobb buys you a 3,400 sf home in a swim-tennis community located in a top school district, but your daily commute is an hour each way.
In your quest for the (almost) perfect home, envision allocating your purchase budget by relative importance among attributes – your must-have and like-to-have lists. While it’s hard to actually allocate specific dollar amounts to individual attributes, the thought process will help you organize and prioritize your purchase criteria. Your allocations will likely shift multiple times as you gain perspective by getting into more and more homes.* A successful home purchase is the optimal combination of home attributes at the price you feel good about paying.
Our job is to help buyer clients identify and purchase the home that best meets their lifestyle needs and personal preferences, within the budget they set. Clients also count on us to help them make a sound investment. Buyers tend to gravitate toward features that offer immediate but relatively short-term gratification (e.g., upgraded finishes). We encourage clients to allocate as much of their budget as they can to proven long-term value attributes (location, construction quality, function etc.), as doing so will reward them on resale.
* Our next blog post will discuss the number of homes you should see before buying.