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Now it's time to hit the pavement, or the Web, in search of a home
Your first step here is to figure out what city or neighborhood you want to live in (remember the old saw about "location, location ..." ?).
For overall demographics and data on metropolitan areas, you can visit a city site like Money.com's annual Best Places to Live list. For more detailed neighborhood information, though, you'll want to use sites like iOwn.com, Yahoo! Real Estate and Microsoft's HomeAdvisor that offer comprehensive school and demographic information on a number of communities. Look for signs of economic vitality -- a mixture of families and older couples, young, low unemployment and good incomes.
Pay special attention to districts with good schools (high teacher-student ratios and graduation rates are among the hallmarks), even if you don't have school-age children. When it comes time to sell, you'll find that a strong school system is a major advantage in helping your home retain or gain value.
Try also to get an idea about the real estate market in the area. For example, if homes are selling close to or even above the asking price, that shows the area is desirable. Try Dataquick.com to check out recent home sales. Your real estate agent may also be able to show you listings. Incidentally, if you have the flexibility, consider doing your house hunt in the off-season -- meaning, generally, the colder months of the year. You'll have less competition and sellers may be more willing to negotiate.
As for the home itself, you probably already know the kinds of things you want -- how big, how many bedrooms, what kind of kitchen, garage, yard and so forth. But it's a good idea to make a checklist of these, both to share them with your agent and also to make certain that you and your spouse or partner agree on what you're seeking.
Consider even the smallest details. Do you want a new house, or one that's more than 50 years old? Should the exterior be brick, stucco, wood or siding? Should the heat be gas, oil or electric? Also, do you want to be within walking distance of town, school, work or transportation? It's unlikely that one home will have all the features that you want, so indicate which ones matter most. Remember, too, that many of these features will make a difference not only to the price of your home, but also to the cost of upkeep.
Then take your search to real estate sites like Realtor.com, iOwn.com, Cyberhomes.com, homeadvisor.msn.com and realestate.yahoo.com. Some of these sites (e.g., realtor.com) automatically show you homes that only partially meet your requirements. But for most sites, if you say the home needs two fireplaces, you will see only homes that meet that criterion. So be wary of choosing search criteria that are too restrictive. For example, select a price range 10 percent above and 10 percent below your true range. Add a 10-mile cushion to the location you specify. If you see a house you are interested in, save it, print it, add it to your bookmark or favorites list, and take note of the MLS code; your agent will want that code to arrange to show you the home in person.
If you're a first-time buyer, pay special attention to condominiums and cooperatives, or co-ops. Condos generally sell for 15 percent to 20 percent less than the cost of comparable detached homes, so you get much more space for your money.
What's the difference between the two? In a condo, each owner has absolute ownership of his own unit, which may be an apartment or townhouse. But owners pay a monthly fee to maintain shared areas like the lobby, the pool or the laundry room. The chief financial risk to a condo owner is that the common charges can rise, or, in the event of a major problem such as a roof repair or boiler replacement, the condo board can assess fees to cover expensive repairs. It's a good idea, when considering a condo, to find out how much the common charge has changed over the last five years, and whether there have been major assessments during that time. Also ask what percentage of the residents actually own their units as opposed to just renting them (many condos include both). A complex with lots of renters has fewer owners who care about the upkeep, and it may be harder to get a loan on such a property.
A co-op is a rarer animal limited to major metropolitan areas. Essentially, the complex is run by a corporation where each owner is a shareholder. The monthly maintenance fees are generally higher than those of a condo, but prices tend to be lower. Their chief downside is that the co-op board usually has to approve new owners and may discourage you from renting your unit if you move out without selling. As with a condo, check on the group's financial health, whether shareholders have been hit with special assessments recently, and whether the unit includes many renters.
When you actually start touring homes, bring a notebook and a digital or Polaroid camera to help you remember details. Your real estate agent should supply you with a description of house and the lot it sits on, the property tax assessment, the asking price and sometimes a diagram of the rooms. Your camera and notebook are there to record other details, ranging from the cost of heating to the view out the rear window.
Spend as much time as possible talking to the homeowners, if they are present. The more you know about the seller and why he or she is leaving, the better. For instance, if the seller is being relocated or the house is part of an estate sale, then the seller may want to sell as quickly as possible, even at a lower price. If the seller has lived in the home only a few years, she may be adamant about the asking price because she wants to recoup her buying cost. Conversely, if she's lived there for decades, a few thousand dollars off may not matter as much. Finally, make sure you understand exactly what furnishings are included with the sale. Even some custom-built furniture, like bookshelves or entertainment centers, may have to be purchased separately.
One note: Don't automatically reject a home just because it doesn't measure up to your desires -- either in features or price. You can always add a deck, for instance, or update a kitchen. And since the asking price is just a starting point for negotiation, you will be making offers and counteroffers as both parties seek an acceptable price.