Owning a home is the traditional cornerstone of the quintessential American dream and many people still see it as the crowning achievement of a stable adulthood. But the actual process of buying a home can feel like anything but stable. There's a lot of information to wade through and even small missteps can feel like big ones in such a high-stakes process. Every housing market is different, so we spoke with Emily Sachs Wong, the owner and broker of Emily Sachs Wong, Inc., within @Properties in Chicago, about the most important things to know when buying a house.
Here are four things you should know before you even think about starting the process of buying a house, according to Sachs Wong:
"No matter what price you're in, everyone has to compromise somewhere," said Sachs Wong. She explained that it's very rare, if not impossible, to find a home that has everything you're looking for, whether that be the number of bedrooms or bathroom, size of a backyard or location. You can't cross everything off your list, even with unlimited funds, she said.
2. Real estate agent
Sachs Wong said the biggest thing to look for when choosing a real estate agent is whether or not you get along well, because you're "going to be spending a lot of time with them," she said. Plus, you want someone who understands you and what you want in a home. The realtor should be fully immersed in the area you're looking to move to and know what properties are going to be for sale before they hit the market.
"You want someone who knows what they're doing."
3. Red flags
Avoid homes with structural issues at all costs, Sachs Wong advised. A house with "inexpensive construction is my most feared sort of property," she said. "When the bones are not good, it will cost money later." Look for homes that are structurally sound, especially on the exterior of the property. Leaky faucets can be fixed easily, but inefficient insulation can cause lots of problems over the course of several years, costing time and money and causing headaches.
Sachs Wong tells her clients that cosmetic issues always can be fixed. Buyers shouldn't base their decisions on decor, she said. At the same time, buyers should look out for houses that are not very nice cosmetically but are still structurally sound. They may be able to get a better house for a lower price and then make the small changes themselves later.
"It's amazing how much the decorating affects the price of a house," she said.
See three more important tips from Sachs Wong at Reboot Illinois, including advice on how to negotiate home prices and whether the Chicago real estate market is really recovering.
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Avg. listing price: $1,230,880 Median household income: $110,929 Pct. households $200,000+ income: 30.3% As of 2010, the median income of households in San Carlos was more than double the U.S. median of $51,914. Over 30% of households in San Carlos earned more than $200,000 per year, more than five times the national rate of 5.4%. San Carlos is one of the most expensive housing markets in the San Francisco metropolitan area. Over a twelve month period, ending in October, it had the nation’s highest median home price per square foot at $473 among all homes listed, according to Trulia. In San Francisco, the median age of home inventory was just 45 days as of the third quarter of 2012, according to Realtor.com, lower than in all but seven markets. Read more at 24/7 Wall St.
Avg. listing price: $1,232,167 Median household income: $74,489 Pct. households $200,000+ income: 18.7% Carmel-by-the-Sea, a small coastal city in California, is well-known for its former mayor, actor Clint Eastwood. Currently, the average four-bedroom, two-bathroom home in the city lists for more than four times the nationwide average listing price of $292,152. With nearly 19% of households earning more than $200,000 in 2010, many families and individuals in the small town can afford expensive properties. One house, despite being not much larger than 2,000 square feet, is currently listed for nearly $4.5 million. Read more at 24/7 Wall St.
Avg. listing price: $1,238,208 Median household income: $91,082 Pct. households $200,000+ income: 14.7% Kailua is one of just two cities on this list not located in California. The O’ahu Island city is 12 miles northeast of Honolulu, which had a vacancy rate of 2.7% — better than most areas but considerably worse than the other areas on the list. As of October, the median price per square foot for a home in the Honolulu area was $398, more than in any other metro except for San Francisco. According to Trulia, a 0.75 acres plot of land, which includes 128 feet of beachfront, is currently for sale for $16 million in Kailua. Read more at 24/7 Wall St.
Avg. listing price: $1,312,250 Median household income: $146,069 Pct. households $200,000+ income: 53.0% The average listing price for a four-bedroom home in Rye is more than $1,300,000, or more-than $1 million above the U.S. average. Employees in the often high-paying finance and insurance industries accounted for a 27.8% of employed population in Rye in 2010, well above the 7% average rate nationwide. As of 2010, 53% of households earned more than $200,000 annually, more than any other expensive city, and nearly 10 times the national rate of 5.4%. Additionally, just 1.3% of households lived below the poverty line versus 13.8% nationwide. Among the properties available for sale are a five-bedroom, 7,446 square feet waterfront home for $12.9 million and a 34.2 acre plot of land for $19 million. Read more at 24/7 Wall St.
Avg. listing price: $1,444,214 Median household income: $120,971 Pct. households $200,000+ income: 37.5% Los Gatos is one of several cities near San Jose on this list. Like these cities, Los Gatos likely benefits from the overall boom in the San Jose real estate market, which currently has the lowest vacancy rate of all metro areas surveyed by Trulia at just 1%. Currently, a number of unique properties are available in the city, including an 11,000 square feet property with an eight stall horse barn and a garage that fits 12 cars listed at slightly under $13 million. Also for sale is the former home of Apple Inc.’s co-founder Steve Wozniack. It is currently listed for $4.5 million. Read more at 24/7 Wall St.
Avg. listing price: $1,495,364 Median household income: $120,670 Pct. households $200,000+ income: 39.3% In Palo Alto, 48.7% of adults have a graduate or professional degree — well more than four times the national rate of 10.3%. The city’s proximity to Stanford University, one of the top universities in the nation, may be partly the reason behind the city’s highly educated population. Among the companies headquartered in the city are Hewlett-Packard and Tesla Motors. The city is a large employer of highly skilled employees, as 25.3% of its workers are employed in professional, scientific and management occupations, well above the 10.4% of workers nationwide. Perhaps the most famous resident of Palo Alto is Facebook founder Mark Zuckerberg, who Read more at 24/7 Wall St.
Avg. listing price: $1,506,909 Median household income: $107,860 Pct. households $200,000+ income: 34.9% Menlo Park is one of just four cities where the average listing price for a four-bedroom home exceeds $1.5 million. As of 2010, the median income in the city was slightly below $108,000. However, the recent Facebook IPO has been a windfall to the area. In June, real estate listing service Zillow reported that the “proportion of million-dollar listings” in Menlo Park — where Facebook is headquartered — rose by 87% between the company’s IPO filing and its first day as a public company. Among the houses available in Menlo Park are a five-bedroom home with a gym, theater area and wine cellar, which is listed for $4.6 million, and a six-bedroom 5,200 square feet home that’s listed for slightly under $5 million. Read more at 24/7 Wall St.
Avg. listing price: $1,582,434 Median household income: $145,023 Pct. households $200,000+ income: 43.1% Though home prices in the nearby San Jose metro area fell by 25.1% peak-to-trough, Saratoga is yet another example of how the Silicon Valley housing market has recovered. Currently, the median price per square foot for homes in San Jose is $337, according to Trulia, more than all housing markets except San Francisco and Honolulu. Prices for many homes in the area have skyrocketed, according to listings on Zillow. A home currently listed for nearly $10 million last sold for just over $2.1 million in 2000, while a home listed for $14.9 million last sold in 1994 for just over $1 million. As of 2010, 43.1% of Saratoga households earned more than $200,000 per year, while 40.9% of adult residents had a graduate degree, versus 10.3% nationwide. Read more at 24/7 Wall St.
Avg. listing price: $1,658,000 Median household income: $107,007 Pct. households $200,000+ income: 37.6% Outside of Northern California, Newport Beach is the most expensive city to buy a home. Home prices are so high in the city that in 2009 legendary bond investor Bill Gross bought a nine-bedroom, 11,000 square feet home for $23 million — and then tore it down. In 2011, Gross listed the empty plot of land for $26.5 million. Orange County as a whole has a vacancy rate of just 1.5%, among the ten lowest in the nation. Despite a 32.7% drop in home prices from peak to trough during the recession, Orange County’s median price per square foot is $265. This trails only the Honolulu, New York, San Francisco and San Jose metro areas. Read more at 24/7 Wall St.
Avg. listing price: $1,706,688 Median household income: $149,964 Pct. households $200,000+ income: 43.6% In Los Altos, the average four-bedroom, two-bathroom home lists for nearly $50,000 more than any other city in the nation. According to Coldwell Banker, for that price a buyer could purchase 28 similar homes in Redford, Mich., the nation’s cheapest housing market. In Redford, the average home lists for just $60,490. Currently, asking prices in the San Jose metro area have risen 12.7% year-over-year, according to Trulia. This is more than nearly every other metro area in the country. Read more at 24/7 Wall St.
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