Although it happens, most people don’t just wake up one day and say, “I think I’ll buy a new house.” The decision is usually the result of one or more changes in your life. In some cases, the catalyst may be a change in your employment situation—you accepted a new job, you were promoted and received a sizeable pay increase, you were transferred to a new city, or your apartment lease is due to expire in a few months. In other cases, the number of family members in your home is increasing or decreasing. These changes are either forcing a change in your housing situation or giving you the necessary push to start an earnest search.

Whatever the reason, after you decide to buy, you must figure out exactly what features you desire in a home. Will it be a condominium, a cooperative, or a single-family home? Do you want a newer home with less upkeep, or do you want a home in an established neighborhood with charming bungalows? Do you want a lot of land and a small house, or a big home and a little plot of land to call your own? It’s time to start planning!

Whenever you embark on a big project, it’s best to make a plan and a list of what you want to accomplish. This chapter helps you figure out your wants and your needs. It’s about deciding what kind of a home you want to live in and how many bedrooms and bathrooms it has to have. By the end of this chapter, you’ll know exactly what you want your dream home to be.

Some buyers have an idea of what their dream home should look like. This idea may be so clear that if the mind were a Nikon camera, you could hook it up to your computer and print a poster-sized, full-color picture in all its glory. Other buyers have no idea what they want in a home. A former colleague once said that the first thing to consider in whatever goal you are trying to achieve is your “ultimate”—in other words, what you want if there were no limitations or barriers to that goal. He called this ultimate his Big Hairy Audacious Goal, or BHAG. So what would you want if there were no limitations? You could have anything you want in the home, any features. The house you ultimately buy may not have everything that your BHAG lists, but it’s a good starting point from which you can work backward.

Wants are what you’d liketo have in your home, without any monetary or other constraints, whether reasonable or taken from your BHAG. Examples of wants include a specific view, jetted bathtubs, a wine cellar, a swimming pool, wood floors or carpeting, and so on. Make a list of what you want and then prioritize that list. It’s okay to dream about the perfect home—that’s the point of this exercise. It doesn’t mean you’ll find a home that has all your wants, but it’s a great way to get started.

Now let’s get real. Your list of wants is ready, but your needs are determined by the actual requirements of your personal life and your budget. Make a prioritized list of your needs and your wants on a piece of paper. Of course, it’s perfectly fine to have both, as long as they both fit into your budget.

For example, you may want a home with five bedrooms, a study, and a library. But the reality is you may need only three bedrooms; a bathroom; and a decent-sized backyard for your kids, for your dog, and for entertaining. Determining your needs list depends on such factors as these:

Determining your needs will help you cut costs and narrow your selections to exactly what fits your requirements.

When choosing the type of home you want to live in, you have many options, each with its advantages and disadvantages. Types of homes to choose from include a condominium, a townhome, a cooperative, a single-family detached home, tenants-in-common, a duplex, and a fixer-upper.

First and foremost, you need to consider what you can afford. Usually, a first-time home buyer starts with something that is a step up from what they’re living in now. For example, if you’re living in an apartment, you may look for a small single-family home. However, that may not always work out. If the place you’ve been renting already comes with a number of amenities—for example, access to a common clubhouse and pool—you might want your new single-family home to have such amenities, too. That may be cost-prohibitive, depending on your budget, so you may want to think about purchasing a condominium.

A condominium, often referred to as a condo, is a single housing unit within a group of housing units in a complex. Owners of a condo have exclusive ownership of the space within the four walls of the unit but share the common areaswith the other condo owners. Condominiums can be individual units in a larger building, like an apartment building, or they can be smaller clusters of two to four housing units per building in a larger group of such buildings spread over a larger parcel of land.

The exterior and all the common areas are the responsibility of the homeowners’ association, or HOA. The HOA membership is made up of the unit owners in the complex. Governing officers are elected from this membership according to rules established and periodically updated by vote of the membership. Each owner pays a monthly dues fee to the HOA, which holds these funds to pay for repairs or upgrade work on the complex. This charge isn’t included in your mortgage payment, so make sure your budget allows for this. If the HOA doesn’t have enough money for a repair, it collects an assessment fee.

Assessments can sometimes be an unpleasant surprise for owners, but they are no different than the owner of a single-family residence unexpectedly finding that he needs to replace the roof or some other component of his home at his own expense.

A townhouse, or townhome, operates exactly the same way a condominium does. The owner owns the individual unit, with rights covering everything inside the home. The outside of the structure and common grounds are owned jointly by the owners and administered by the HOA. The HOA collects monthly dues and any special assessments. As with a condo, the HOA is administered by officers elected by the general membership of the HOA. The day-to-day tasks, as well as any repairs, are managed and paid for by a management firm engaged by the HOA.

The only difference between a typical condo and a townhouse is that condos are often multiple units in a large building, but townhomes are usually individual residential structures, or structures that include no more than two or three units per building, all arranged together on one large parcel of land. The townhome owners also share the common grounds and facilities. Some associations offer both condominiums and townhomes.

A cooperative, usually referred to as a “co-op,” is an individually owned residential unit that is a part of a larger whole. However, it’s different from condos and townhomes in that owners own shares of the whole building, with specifically assigned rights to live in and use a unit as their own. Unlike a condo or townhome, owners don’t own the living space within the walls of the individual unit. Co-ops are usually more common in Eastern states, especially in New York.

For budgeting purposes, remember that if you want to buy a co-op, you also must pay maintenance charges just as if you were living in a townhome or condo. These charges are determined by how many shares you own in the building. The more shares you own, the more your maintenance charges may be.

As the name implies, a single-family detached home is one house on a lot that houses only one family. It is not physically connected to any other home, and the rooms are fully contained in a single structure. Unlike a condominium-type structure, a single-family home shares no common features with any other unit, such as a laundry room, a garage, or storage space. It may or may not have a garage or carport, and if it does, that structure can be either attached or detached from the home.

When you buy a single-family detached home, you are solely responsible for all its maintenance and upgrades, both inside and out. If you want to redo your kitchen, that’s your prerogative. If the carpet in the hallway is getting threadbare, that’s your problem. If the roof or grounds need maintenance, it’s your responsibility. Nobody else will repair it for you. This home is truly your castle, for better or worse. This changes only if the home is part of an association in which someone else takes care of the outdoor property and you are responsible for only your home.

A duplex is a combination of two separate areas of living space under one owner. In the case of a duplex, an owner purchases and owns an entire building and then leases the second unit to a tenant for a specific period of time. In this case, you would own the building and grounds—inside and out—just as you would with a single-family detached home, and you would have full control and responsibility for the property.

One important note is worth mentioning here: although duplexes have been referred to as one building with two units inside, some duplexes actually are separate structures sold together, with each structure being an individual living unit. The units have separate keyed entrances, utilities, and mail delivery; if parking is included, they also have separate parking facilities. Inside, each has its own kitchen, bedrooms, bathrooms, and other rooms. You could lease the second unit or keep it vacant, use it for storage of your personal possessions, or use it as your place of business, depending on the local zoning codes.

Buying a duplex offers an additional benefit. Because you can rent out the second unit, this allows you additional savings on your income tax because that second unit becomes an investment property, with all the potential tax savings such a property receives. However, some states exact higher property taxes for investment property; ask your agent or financial representative. We cover this more in Chapter 8.

Just keep in mind that a duplex isn’t the same as a “mother-daughter,” mother-in-law, or in-law home. These homes have additional space for a family member to live with you and share some of the features of the home. It has its own entrance and maybe its own kitchen, bathroom, and living room. Depending on the zoning laws in your area, you may or may not be able to rent it. You may use the area for an elderly relative who is staying with you or for an older teen who needs or wants her own space. Presumably, the arrangement could also have the relative living in a guest cottage or carriage house on the grounds. The physical structure isn’t as important as the arrangement.

Another way of buying a home isn’t as common but is gaining popularity, particularly on both coasts and in a few major cities throughout the country. In a tenants-in-common, or TIC, arrangement, you purchase a share in a building and simultaneously own your area and jointly share ownership in the overall building, based on your percentage of the original purchase.

A TIC arrangement involves at least two separate owners, although there is no limit on the number of owners of a TIC property. Each owner has a legal ownership to some part of the whole, but not every owner must have an equal share in the property. Each owner’s share is mutually exclusive of the others and may be sold independently of the other shares. An immediate benefit to each of the common owners is that a TIC arrangement allows ownership at a lower entry cost than if any single owner had to pay for the entire home.

For example, let’s say three unrelated people agree to buy a three-bedroom home as a TIC purchase. If they’re smart, they’ll have a legal document drawn up for them, laying out the details of their purchase, including who owns what rights and the size of each person’s share. Each person will obtain his own mortgage financing for his share of the purchase and contribute his percentage share of the down payment. The sum of these contributions will add up to 100 percent of the purchase price. When the purchase closes, the three buyers will own the building in common with each other.

If an owner wants to sell after a period of time, the others do not have to agree to sell as well. The owner who wants to sell places his share of the property on the market. Whoever buys that share becomes a common owner of the property along with the other two existing owners. If this sounds confusing, don’t worry: many real estate professionals don’t understand the concept either. Some won’t get involved in a TIC just because of its unique details. Nevertheless, it is a viable option in some areas.

A fixer-upper is a home that is in less-than-perfect condition at the time of purchase. Fixer-uppers generally require less up-front cost and can be almost any type of home—a single-family detached home, a condominium, a townhouse, or a duplex.

Usually the price is lower than for similar properties in the area that don’t need as much work. A fixer-upper can be a cosmetic fixer or what’s charitably known as a teardown. This should give you a loose idea of how much will be necessary to get the property into what you think is satisfactory condition. Some people buy fixer-uppers to save money and then do the repairs over time. Others buy them because they enjoy the creative outlet and want to give the home their own personal touch.

Whatever the reason, cosmetic fixing of a fixer-upper can be as simple as repainting the interior, changing some of the landscaping, or replacing such items as the wall-to-wall carpeting or the baseboard and ceiling moldings. The work is relatively inexpensive, not structural, and is designed to improve the appearance of the home. If the home needs only cosmetic fixing, you can probably live in it while the repairs are being made. On the other hand, if the repairs are more extensive—for example, the home needs a new electrical system, plumbing system, furnace, or ducting system (especially in the winter), or an entire new foundation—keep in mind that the price of the home may be lower, but the cost of the repairs will be substantial. You will also probably need to live somewhere else until the repairs are made, so add that into your budget, too.

The inside of your home can loosely be referred to as the floor plan. The floor plan governs the size of the living space inside the home, the “flow” of the house (how easy movement inside the house is), the functionality of the home, and, to some degree, the suitability of a particular home to your lifestyle.

Does the home have adequate bedrooms and bathrooms for the size of your family? Is the kitchen sufficient for your needs in assembling meals for you, any family members, and guests that you may have from time to time? Is there adequate space for your hobby? Remember, a poorly designed floor plan can be one of the most costly things to change in a home. In general, if you do not like the floor plan, you should look further or have a skilled professional take a closer look. Making changes could require moving load-bearing walls,and that can be a very serious issue.

When you’re reading listings of homes for sale, you will see the size of the home measured as square footage—for example, “Colonial-style home with three bedrooms, two baths, and 1,500 square feet.” The square footage of a home is the living area of the house inside its walls. It is also one of the bases for calculating the value of a home. Generally, a home with a larger living space is worth more than a home of similar design that has fewer square feet in its interior.

There really is no typical size of living area from one home to the next. However, it is safe to say that any floor plan with fewer than 1,000 square feet of living area is considered a small home, no matter how many rooms the home has. It is also safe to say that any home over 4,000 square feet of interior space is a large home.

Now that we know how much living space the home has, let’s take a look at how that living space is divided. Usually, the first feature buyers look at is the number of bedrooms. Obviously, how many you need depends on two basic considerations: the number of people in your family who will be occupying the home and, based on your lifestyle, the frequency and number of overnight guests.

A single adult with few planned overnight guests may require only one or two bedrooms, while a family of five or six—especially a family with older children who may require their own rooms—may need at least four or five bedrooms for family, and more if they want a guest room. The largest bedroom in the home is usually called the master bedroom. If it has a bathroom accessible from the bedroom, it is referred to as a master suite. However, there are some instances where the bath in a master suite also has access from a hallway or other bedroom. Your seller may still consider this to be a master bedroom. In my opinion, as well as that of many other experts in the field, this outside access effectively removes it from “master” status.

You may also want to consider the location of the bedrooms. If you are single, a bedroom at the end of the house away from everything else is probably just fine. However, if you have children, bedroom placement can be more of an issue. For example, if you have a baby or youngster, you may want your child’s room close to your master bedroom. If your kids are into or beyond their teens—or if you have an adult child or elderly parent living with you—you might want a master bedroom located on a separate floor from the others.

Consider the bedroom size next, especially if you or a child has a hobby or interest that requires extra space. For example, if your son makes and collects model airplanes, a slightly larger bedroom with space to display his collection may be desirable. Or perhaps your daughter is a gymnast and has won a number of awards that she’d like the space to display in her room.

Also, family size and particular use requirements should be considered. Will siblings share a bedroom, or does your high school-aged daughter need a desk and bookshelf area for her studies?

Something else to consider, but often forgotten, is emergency exit safety. Does each bedroom have easy access to the outside in case of an emergency? Some municipalities have ordinances that require second-story bedrooms to have some form of installed exit method, such as a collapsible fire escape outside a window. Ground-floor bedroom windows should be large enough for someone inside to escape. This may save your life.

Along with bedrooms, it’s important to consider how many bathrooms the home has. Again, the number you need depends on how many people are living in the home. If you are a single homeowner, one full bathor one full and one half-bathmight be sufficient. If you have a guest room, you may want a home with two bathrooms.

If you are a family of four, at least two baths may be necessary to keep everyone happy. Yes, a family of four can survive and thrive with only a single bath, but it can make for regular moments of tension when everyone is trying to get moving to work and school in the morning, or preparing for evening plans out on the town. The larger the family, the more bathrooms you may want.

When considering the kitchen, you need to take many things into account beyond what you’ll have on the menu for dinner tonight. When looking for a new home, try to find a home that has a kitchen that meets your needs. Altering a kitchen can be one of the most expensive remodeling projects out there. Also, a kitchen probably has more effect on resale value than any other part of a home.

The size and capability of your kitchen depends on your lifestyle and the number of people living in the home. A larger family, and even a single homeowner or couple that frequently entertains, may need a bigger kitchen. If the kitchen comes with a small dining area, it is called an eat-in kitchen. Kitchens can also include a small room, called a pantry, off the kitchen where the foodstuffs are stored.

A den is an extra room that can be used for relaxation or socializing. A den can also be converted into a home office where you can handle personal or work-related activities or into a home gym. It can also be a playroom for the kids to hang out and play. Usually a home office or den is located away from the kitchen, to minimize distractions by the cooking or mealtime activity. Sometimes, in larger homes, a den or office may also have its own separate entrance, as well as interior access.

A living room is usually a formal room for family events or entertaining. Frequently, it is one of the largest, if not the largest, room in the home.

A family room can be located in any part of the home, and it’s usually in addition to having a living room. Think of it as an extra space for entertaining. Here’s where it gets a little interesting. When you’re looking around, the home might have what’s called a “great room.” This is a living area that connects to the kitchen or dining room, making it one big space. A great room can be a family room, but a family room is not necessarily a great room.

A dining room is used for exactly what the name suggests. Typically bigger than an eat-in kitchen area, the dining room serves as a formal sit-down area for full meals and is often near or connected to the kitchen, with access by a doorway or a pass-through area. Usually, the room is large enough for intimate family dining or for larger gatherings of friends and guests, such as holidays or celebrations.

In addition to the basic rooms we’ve already discussed, you can buy a home with other rooms, depending on how much you want to spend and your wants and needs.

For example, if you are a painter or sculptor, you may buy a home with space for an art studio. Are you into photography? Consider a room for a photo lab. Do you like dance or martial arts? You might want a room large enough to practice. In today’s market, it’s common in middle- to upper-priced homes to have a wine cellar. You may also need an attic or extra room for storage.

In many parts of the country, homes commonly have basements, which can vary from a large empty area used mostly for storage, to an area that is further divided into a number of rooms. Included among these basement rooms may be a media room, set up with a TV and other electronic entertainment equipment, and an exercise room, equipped with various exercise equipment such as a treadmill or stationary bike and weights. A basement can also be used for a home office, a playroom, a game room, a bedroom, or any combination of all of these. Basically, the only limitation is your imagination!

The laundry room, which can be located on any floor in the house, usually has a washer and dryer, and possibly a closet or other storage area for washing supplies. It may also have counters for folding clothes and an area for ironing. In some homes, the laundry room may be connected to the upper floor of the home by a laundry chute, to aid in getting the dirty laundry to the laundry area. In some higher-end or larger homes, there may even be two laundry rooms for convenience.

Once made to keep a car out of the elements, today’s garages are far more than just a simple covered parking space. The mere existence of a garage now adds value to a home. A garage can be an extra storage space with beautifully planned shelves and cabinet systems for storage. Some garages also have a workshop area, a half-bath, and even laundry appliances.

Consider whether the garage is attached or detached from the home. If it’s attached, you won’t have to haul the groceries from the car through the rain or snow to get to the house. If the garage is detached, how far is it from the entrance of the home? Also, make sure the garage has a fire-retardant door leading into the home. Due to the potential for automobile- or workshop-related fires, the connecting door should be a certified fire-retardant to slow down and protect the home from a garage fire. This is often missing in older homes because the door was installed before building codes were updated to require this type of safety door.

When looking at a garage, see if there is outside access other than through the main garage door, and ask if the garage comes with a remote electronic door opener.

In some of the warmer climes in the nation, a carport is a common alternative to a garage. It provides coverage from rain for the family car and, like a garage, allows parking off the street. However, because it does not have the wall structure of a garage, it does not usually offer the storage capabilities of a fully enclosed garage.

No matter what type of home you buy, it sits on a piece of land, and the price you pay for most homes usually includes the cost of that land. However, if you’re buying a condo, it includes the fractional share of the overall condominium site that is deed-apportioned to your unit. The only exception to this is in a few local areas where homes may be built on leased land.

You should look at the land the same way you look at the home. Generally, the most important thing to consider is the size of the parcel. Usually measured in either square feet or acres,the general rule is that the larger the land, the more expensive the home. For example, in the same neighborhood or area with comparable home values, a three-bedroom, two-bath home of 1,500 square feet will be more valuable on a one-acre lot that backs up to woods than the same house on a small quarter-acre lot that is surrounded on all sides by other homes.

When envisioning your home, you need to envision the land it will sit on, too. Maybe you’ve always dreamt about a home on a hill overlooking a nearby ocean. You might have always wanted a home that sits on a large tract of open land or is in the middle of a forest. Maybe you want land so you can create the perfect garden. Choosing the land is almost as important as choosing the home. Why? A home sitting on a half-acre lot overlooking a nearby ocean is generally worth more than the same home situated on a half-acre lot that looks onto a vacant lot.

Keep in mind, however, that there isn’t much you can change about your land. If it doesn’t overlook the ocean, it never will, and if the yard is too small, sits at the foot of a cliff, or is surrounded by other homes, it will always be that way.

The yard is like an outside room. It’s where a majority of your outside activities will take place. Just as you would decorate a room within the walls of your home, you have free rein to do the same to the area in your yard. You can fence it in, thereby limiting access to anyone else outside the home. You can—subject to local zoning regulations—build outbuildings or recreational facilities on it. You can also landscape it with trees, shrubs, and flowers to your own personal taste.

The yard also may be one of the reasons you choose one home over others. Perhaps you like to garden in your spare time. You may see an unused yard and envision rows of tomato plants, peppers, cucumbers, squash, and maybe a few sets of blueberry or strawberry bushes. Or the yard may be the perfect place for your young children or dogs to safely run around. Maybe you’re the type of person who isn’t interested in maintaining a large yard, so a small yard requiring minimal maintenance will do just fine.

You may want to have other features and amenities in your home, including a swimming pool, a patio or deck (with or without a gas barbeque), a gazebo, garden potting sheds, storage sheds, or detached artist studios. These extras may increase the price of the home. If they don’t exist but are something you want after you move in, make sure the yard has enough space to build on.

Where do you want to live? Your new home’s real estate value will be affected by its location. A home in a neighborhood with low crime statistics or with owners who are upper-class wage earners is worth more than a home in a lower-income neighborhood with higher crime statistics.

Although it’s not always the case, some neighborhoods are less expensive because of their past history. Perhaps the area once had a reputation as a crime-riddled area, was once an industrial site, or is located near a busy railroad or highway. On the flip side, the home might be in an area that’s experiencing a renaissance after some hard times. If there has been some renewal and growth to the area, it may be an opportunity for you to get an excellent home for a more affordable price. This will lead to an increase in value over time.

If you’re looking for a less expensive home, you can also check out past military housing that has been converted into housing units. The former site of Hamilton Air Force Base, located in northern California, is a good example of this. It’s also possible to find an affordable home, such as a fixer-upper, in a pricey neighborhood. You’ll buy it at a lower cost, upgrade and repair it, and earn equity almost immediately simply because of the neighborhood it’s in. Again, however, keep in mind you will need the money to repair and upgrade the home.

Unless you work from home or are retired, your commute is a very important factor to consider when buying a home. How far do you have to travel to get to work, and how much time will it take? You should also investigate the public transit system to see if buses and trains have stops in your area. Your real estate professional will be able to advise you or direct you to sources for this information, or you can visit the public transit websites to check routes and schedules. If you do need to use the public transit system, add in the cost of your commute to your home-buying budget.

If you’re transferring to a new office, talk with your new colleagues and the human resources department for the real scoop on commuting issues in your new hometown.

Unless you’re buying a home in a rural or mountain area with plenty of land around you, you’re likely to buy in a neighborhood.

Some neighborhoods are close enough to the town center that you can walk. Others may lie farther from downtown, but feature less traffic and larger plots of land. Others offer easy access to local recreational venues or to a freeway for your commute. Choosing a neighborhood depends on your wants and needs.

Talk to your real estate professional about what type of neighborhood has more added value where you want to live. For example, you may want to buy a home close enough to walk to town, but consider that this location might also be very traffic congested. The home might also be harder to sell later because of this. In other towns, homes that are located close to town actually command higher prices. It all depends on what’s on your list of must-haves and where you’re looking.

Buying a home in some neighborhoods might cost you more simply because of their historical significance or the fact that there are restrictions on remodeling the homes there. A good example of this is in the Brooklyn Heights section of New York, where homeowners are restricted from altering the outside of their historical brownstone homes. If they want to repair or upgrade the inside of their home, they must follow specific guidelines. As a result, the value and costs of these homes are higher, so think about this if that’s the type of neighborhood you want to live in. Keep in mind, however, that you can check in advance with local authorities if you plan to make any modifications after you close—find out your limitations before you buy.

Even if you don’t have children, the quality of the local schools is a major factor in determining what you’ll pay for your home. Communities with good school systems always command higher home prices. This can be further extended within an individual community if one school has historically better test scores than all the others. When you narrow the areas where you want to live, ask your real estate agent for school information. When it comes to budgeting, also factor in that, if you have kids and you have chosen a home where the local school system isn’t particularly good, you may have to consider a private school.

Are you looking to buy a home that’s accessible to a grocery store and mall, or are you looking for a home that’s as far away as possible from the nearest mall? If shopping proximity is important to you, you can do three things. First, ask your Realtor for information. She’ll be able to tell you where all the major stores are located and how to get there. Second, once you find a home you’re interested in, take a drive from its location to the stores where you’d likely be shopping. See how long it takes, how easy it is to park there, and how traffic is along the route. Third, call the local Chamber of Commerce and get information and recommendations on local businesses. This will help you determine what’s available in your neighborhood or town, and when you will have to travel. To find your local Chamber of Commerce, visit www.uschamber.com.