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Setting Buying Criteria
Knowing your purchasing criteria is a vital step in the home buying process. Taking the time now and clarify the finer details of your ideal home will help you make a more informed and sound financial investment when it comes time to purchase.
Setting Buying Criteria is Step 4 in the 7 Steps to Home Ownership.
As a buyer, it is easy to be overwhelmed with the number of decisions you need to make. Go through each section on the Buying Criteria Worksheet step one by one to simplify the process:
What neighborhood you want to live in.
What type of home you are going to purchase.
What you must absolute have from your home.
What you must absolutely must not have.
What you would like to have.
Use as many copies of the Buying Criteria Worksheet to brainstorm, cross off, tear in half, crumple, re-evaluate, and debate your original inputs. Ultimately, you want a clean, final draft. This is your Buying Criteria.
Start with your price point. Your pre-approval amount is the upper limit of your price point. Keep in mind, you not required to spend your full pre-approval amount. The lower range should reflect the price you would pay for a property that is in the right neighborhood, has all your Must Haves & none of your Must Not Haves. The upper range should reflect the price you would pay for a home that incorporates all of these and more of your want to haves.
Using our Mortgage Calculator will help determine what the ideal price range is for you, based on your budget & other financial obligations and goals. Determining your price points gives you and your broker realistic numbers to work with while negotiating the final sales price and also prevents you from getting emotional about a house (which happens nearly every purchase). If a house is absolutely ideal, will you go over your desired upper range?
Decide now & make a firm commitment with yourself, your spouse/partner, and/or your broker while you are sound mind.
Further Reading on Pre-Approval
Neighborhoods are of paramount importance. You likely have an idea of a few neighborhoods you’d like, ask yourself, what is it about those neighborhoods do you like? Ask your friends, colleagues & your real estate broker for a few recommendations of other neighborhoods to explore based on your likes, even ones you may not have even known about or would not have considered.
Walk and drive around your list of neighborhoods, check out the local parks, grocery stores, gyms, churches, or other amenities that are important to you. Do your research. How will the schools affect your resale value? What are the crime rates? Has the city planned any major zoning changes? Am I willing to live through construction if it increases my property value? Ask your broker to help you analyze each of the neighborhoods you’re considering.
You should narrow your Preferred Neighborhoods down to your top 5. Having less is okay, but it may take longer for the perfect property to come available in a specific subdivision. It can be worth the wait, only you know for sure.
Further Reading on Researching Potential Neighborhoods
You now know the following: I am buying a property in x, y, or z neighborhood between x and y price points.
Congratulations, this is a major achievement in your buying process! Now it’s time to narrow down the actual property criteria, what the house and lot will physically look like, what it will have, not have, and what it might have in the future.
Decide now, what is your long term plan for this property? Will you be living in it forever? Will it eventually be held as an investment rental? Or do you plan to sell it in 5 to 10 years? Answer these questions & keep them in mind as you determine your property criteria.
You can purchase one of four property types with a residential mortgage:
1. Single Family Residence- A stand alone, detached house situated on a lot.
4. 2 to 4 unit multi-family- separate housing units for residential inhabitants contained within one building or several buildings within one complex. Also known as duplex (2 units), triplex (3 units) or quad (4 units).
If you have not decided, attend a few open house and have your broker take you to different types of properties. Imagine actually living in the space, weigh the pros and cons and be honest with yourself when making your decision.
Further Reading on Residential Property Types
Characteristics / Amenities
Finally, the fun part! The actually property characteristics. There are 3 main sections, Must Have, Nice to Have, and Must Not Have. The quickest way to make some entries is to think of things that are unchangeable about the property and add them to either the must have or must not have. These items include:
Where the house is situated on the lot (would you like a big backyard, big front yard, both, or neither?)
Proximity to schools, main roads, churches, etc
Number of levels, 1 story, 2 story, etc
Layout/Style- Rambler, Split Level, A Frame, etc
Basically everything else can be placed in the Nice to Have or Must Have, such as:
Garage or Covered Parking
Back patio or deck
Nice to haves are items that you really want, but are willing to add later yourself. The project will save you money in the long haul, but you’ll have to do the work & coordinating projects completed.
Again, the Nice to Have box guides you and your broker on what amount to offer on the house, so if the house has 1 or 2 of the 10 items listed in the Nice to Haves, you’ll be on the lower end of the range. But if it has 8 of the 10, you’ll want to be aggressive with your offer to secure the property.
Once you’ve completed your final draft, you’ve narrowed down your search & you will find that there are likely very few options that meet your criteria. This is a good thing! Instead of choosing between 215 houses, you get to pick between 4. Trust us, this is a much easier decision!
Off Market Specialist. Specialties: Buyer's Agent, Listing Agent, Relocation, Commercial R.E. I'm a real estate consultant who's made a career of an excellent track record of outstanding results an....