Better Home Less Money

You may know of a friend or family member who bought a home a decade ago and sold it for considerably more than they paid for it. It's a common scenario. However, most people think that the deal was sealed when the owner sold the home they'd lived in for 10 years, but that's not what happened.

Actually, the deal was sealed and the money made 10 years before when the person bought the home. Of course they didn't actually pocket any cash; in fact, they probably stretched and spent what felt like a lot of money. But in purchasing their home, the buyer created the context for successfully selling it later. It was 10 years ago the buyer had the power to choose. And their decision to purchase that particular property created the potential for a profitable sale a decade later.

Here's how it works. When you hunt for the home that's right for you and find one, you're buying a marketable asset that is in a specific neighborhood, that includes a certain amount of land and that has a structure of a certain size and condition. The fact is that variables such as the amount of land you acquire, the desirability and safety of the neighborhood, the school system, the size and quality of the home and other such tangibles are chosen when you buy. Once you have purchased...they're yours.

It's unlikely you will ever change the quality of your local school, remake your neighborhood, expand the land on which your home sits or significantly improve the intrinsic quality of your home. To a degree, you can update and expand upon the structure in which you're living, but rarely do improvements return even their own cost, let alone produce a profit.

When you sell, you're going to get roughly what it's worth. Like cashing in a stock or savings bond. The biggest decisions a seller makes is when to sell and should I clean it up. It is a dangerous misconception that money is made when you sell. The fact is profit is realized when you sell. The profit was locked in when you bought, back when you had the power to choose.

So, getting back to the truth that you make money when you buy, consider the following prior to purchasing:

* Location, Location, Location (sound familiar)- A great neighborhood is a great neighborhood. You can't move real estate. A bad neighborhood, even in transition, will be a bad neighborhood for a long time.

* The schools, even if you do not have school age children - Why should this be of concern to you? A good school system will payoff later when you go to sell your home to someone with school age children.

* How large is the yard? - If you buy a home on .25 acres, lets say, and everyone else is on a .15, you've got something special to offer. Land tends to be getting more and more scarce. They are not making anymore land. As supply and demand go, land is a good investment.

* Size and quality of the home - Square footage matters and garage conversions don't count. Find the biggest home with of the best quality construction you can. This is done by scouring the homes in the best areas in your price range. After a review and analysis of all likely home candidates, the best will be apparent. Bigger and better homes will simply feel bigger and better. Of course, get a home inspection on your final choice as a safety precaution.

Don't just imagine living in your home when you buy. Imagine selling this home before you buy. Who is going to buy it from you? What will they think of the area and home? Selling is an inevitability that is rarely considered by home buyers.

No matter what home you purchase, chances are that in a healthy economy it will increase in value. But a desirable home in a good area will appreciate faster than others. And that difference compounds over the years. The difference between let's say four percent and five percent appreciation over ten years on a $400,000 home is $68,000. Quality pays off.

The quality of the area, land and home should be evident prior to purchasing. You'll never regret taking the time to buy smart.