How to Decide What Size of House is Best for You

In recent years, the mantra in the world of housing has been “bigger is better.” It’s also common to be told that you should buy “as much house as you can afford.”

For many homeowners, this type of thinking results in a large house that may not be necessary. Many people were shocked to discover that we could have bought a home that cost twice as much (and was, presumably, twice as big) as the house we are now leaving behind. “Why wouldn’t you get a bigger house?”

The reality is that we neither need nor want a big house. In fact, our next move is going to be into a smaller apartment. We realize that we don’t need a lot of extra space. As you consider what house to move into, think in terms of what you need for size, rather than basing it entirely on what a lender will let you borrow.

How Much Space Do You Need Now?

First, realistically consider how much space you need right now. What types of activities do you commonly participate in while at home? Does your family spend a lot of time together in common areas like the family room and kitchen? Those areas might need to be large, while you can get away with smaller rooms.

You can also consider how much space you need for bedrooms. Can some of your kids share rooms? Do you need a home office? Perhaps you need a guest room because you have a lot of company.

In our case, we are moving into an apartment with three bedrooms, even though we only need two for sleeping. The third bedroom is going to be a combination guest room and office, since we know that we will occasionally have company stay with us, and I definitely need an office so that I can effectively run my business.

Carefully think about how much space you will actually use on a regular basis, and go from there.

Will You Need More Space in the Future?

The next step is to figure out whether or not you will need room to grow. If you are just starting a family, and you plan to have more kids, or if you think you will add pets to the mix, you might need a bigger home.

Of course, that only applies if you expect to stay put for a while. If you think that you will buy a home and stay for seven to 10 years, it can make sense to get a slightly large home to accommodate what you hope will be a growing family. If you think you will move in the next couple of years, though, there is no sense in getting a big home that you aren’t even going to use.

You can also consider the virtues of having more land outside, versus having a home that takes up most of the lot. You might find that, for kids or for pets, a bigger yard is better than a bigger house.

Carefully consider your options. While it’s tempting to get a big house for the status it conveys, that’s not always the wisest course.

Buying a House? Three Big Things To Watch Out For

Back in 2007, I decided it would be a good idea to become a real estate agent. Yeah, I don’t know what I was thinking.

Okay, that’s a little misleading. I can tell you exactly what I was thinking. I saw the average commission an agent gets for selling a house, and was instantly attracted to the business. I also liked the flexibility, the ability to set my own hours, and getting the chance to show off my impressive (at least, in my mind) knowledge of the business.

Flash forward to 2010, when I quit the business after 3 years of pretty lackluster performance. I made a living at it, but I never took that next step. It wasn’t that I didn’t know anything about the business; rather, it was because I was terrible at getting new clients. I wasn’t nearly as aggressive as I needed to be.

So as an ex-Realtor, I think I’m fully qualified to point out some things to watch out for when you buy your next home. Here are three that are particularly important.

1. Seller has your money

When I was in the business, at least once a year I’d hear about a house that had spiffy, high-end appliances when the buyer first looked at the place, and then were switched out for crummy ones by the time possession day rolled around. Without evidence, it’s hard to prove what appliances were there on what date.

This brings up something that, in my opinion, is the biggest pitfall to a potential buyer. When the deal closes, the seller gets their money before the buyer has a chance to inspect the property. Am I the only one who sees something wrong with that? Usually it’s something seemingly minor as the property not being professionally cleaned (or stuff being left behind), but still. The seller isn’t honoring the contract.

What’s the buyer’s recourse? Well, not much. They can either a) put pressure on their Realtor, who then puts pressure on the seller’s Realtor or b) legal action. At that point, the seller isn’t going to be too motivated to do the right thing. After all, they’ve got the buyer’s money.

How to avoid this: Insist on a clause in the contract that schedules a walkthrough of the property a day or two before closing. It’s easier to deal with these things before money has exchanged hands.

2. Dual representation

It’s only natural for a Realtor to want to show you her own listings. After all, she has sellers to keep happy, and every listing she sells is money in her pocket. But is it really in your best interest?

The answer, of course, is a resounding no. There are rules in place to ensure Realtors don’t share your confidential with sellers (and vice versa with the seller’s info), but they’re often ignored to get a deal done. If you’re in a situation like that and give your maximum price to your Realtor, I just about guarantee you’ll end up paying that. Remember, Realtors are paid to get deals done. They’re not looking out for your best interests.

How to avoid this: Calmly explain to your Realtor that you don’t feel comfortable in that kind of situation at the beginning of the whole house hunting process. And if you get into it afterwards, be very careful of the amount of information you disclose to your Realtor, especially about price. Assume it will be used against you.

3. Stretching affordability

The majority of the time, folks go out looking for a house with a set budget in mind. They’re trying to be smart about it, and then the Realtor will inevitably show them something that’s a little out of their price range. It ends up being better, and the buyers have a choice to make. Is it worth it to stretch our budget to get a nicer place?

This isn’t really a nasty trick on the Realtor’s part. She legitimately wants to find a house you’re happy with, and the extra commission on, say, $20,000 isn’t a big deal for her. She just wants the deal, even if it’s for the original amount. But if she finds you a nice place, chances are you’ll call her in five years when you’re ready to sell.

How to avoid this: There’s two ways to go about it. You can either put your foot down and demand that your Realtor not show you a property above $x price. Or, you can go about it in a more subtle way. If your actual budget is $300,000, explain to the Realtor that you’ve only been approved for $270,000. That gives you a bit of wiggle room if a better property comes about.

It’s much easier to deal with these after you’ve already figured out what some of the common tricks are beforehand. For most folks, buying a house will be the biggest financial transaction they’ll take on. It’s best to go into it informed.