Are You Ready to Buy a House?

The following is adapted from REAL Experience by authors Ben Walkley and Kevin Wasie.

Buying a home is one of the most significant financial decisions you’ll make in your life. Particularly if you plan to live in the home, it will also be one of the most emotionally significant decisions you’ll ever make. Choosing to buy a home before you’re ready can result in a bad housing situation that could negatively affect your life for years. If you are ready and you make a great real estate decision, that housing investment has the power to catapult you into improved life scenarios across the board, potentially leading to financial profit, better community for your family, better schools, a restful home, and so on. The house you buy today is going to impact the kind of home you end up in five, ten, twenty years from now — for better or for worse.

However, that doesn’t mean it’s “game over” if you make a mistake. What matters most is not a single success or failure, but your trajectory toward either end. If you made a mistake and determined that you’re going to learn from it, then you’ve shifted your trajectory toward growth and success. If your first home buying experience didn’t go well, don’t worry — you get to try again. You’ll do it better next time!

You want to get it right — which means you need to start by answering this fundamental question: Are you ready to buy? You’ll be able to answer that question confidently by thinking through four different areas of readiness: strategy, emotional readiness, finances, and knowledge.

Are You Ready with a Clear Strategy?

Start with why. Why do you want to buy a home? Do you want to find a comfortable home for your family to settle down in? Do you want to buy a property as an investment, with the intention of selling it later for a profit?

Once you determine your why, you can then determine the how. The why informs your strategy. For instance, if you’re looking for a home for your family to live in for the foreseeable future, it’s less important to find a killer deal and more important to look for a home in a neighborhood you like, with a layout you’ll enjoy, good amenities, and so on. On the other hand, if you’re buying as an investor, that’s going to require a different strategy. You might look for a house in a good area with a below-market-value price that you could easily flip.

Here’s the point: you need a clear, well-informed strategy. Buying a home is not an area of life where you want to wing it.

Strategic Points to Consider

If you think you’re ready to buy, consider all of the angles. If you’re buying with a spouse or someone else, make sure you get on the same page about key questions:

• Why do we want to buy now?
• Where exactly do we want to live, and what neighborhood characteristics matter most to us?
• How long do we want to live there?
• Why do we want to live there?
• What do we really care about in a home? What are our “non-negotiables”?
• What is the style that we like? What are our preferences?

Particularly if you intend to buy with a significant other, we recommend both partners play an active part in these conversations. We often see one member of a couple resort to passively going along with what the other person wants, but this can easily lead to problems down the road. If the husband, for instance, pushes to buy a smaller house in a more expensive area, then the wife may feel frustrated with him every time she feels cramped in that space. If the wife pushes to buy the home with the beautiful willow tree out front, the husband might feel angry every time the root system of that willow tree causes a major plumbing issue. “I never liked this house anyway.” “I knew you were wrong.” “Great, another problem!” You don’t want those statements to be part of your future!

If you and your partner don’t agree on what you want, that’s a sign you are not ready to buy. Once you both are in firm agreement about where you want to live, then you’re ready to move forward with a shared strategy.

Are You Ready Emotionally?

We know of a couple who experienced a mold issue shortly after they moved into their new home. They moved backed in with her parents and hired a team to come get rid of the mold, but even then, the husband didn’t feel good about moving back in. They spent tens of thousands of dollars, doing more tests, looking for more mold, but still wouldn’t move back into this house.

Finally, we learned that this mold issue had emotionally triggered the husband because of an experience from his past. When he was growing up, his parents divorced, and his mom struggled to make her mortgage payments. The roof had a leak that she couldn’t afford to fix, which meant his childhood house had a ton of mold in it. Now, as an adult, the mold issue in his new house had been dealt with, but the trauma from his childhood meant he couldn’t let it go. He’d been paying for this house for two years, didn’t live in it, and eventually considered getting a foreclosure, which would seriously damage his future with home ownership — largely because of this emotional weight from his past.

Emotions play a much bigger role in real estate than most people realize, and the home-buying process is likely to emotionally trigger you in a number of ways. There’s stress. There’s excitement. There’s anxiety — it’s a roller coaster. Emotions are part of the journey, and it’s okay to expect that you may get freaked out at times. However, you’ll ideally get to a place of neutrality and objectivity when you’re making this huge decision; you don’t want to make this purchase in the heat of an emotional moment.

Red Flag Reasons

When we meet with clients, we talk with them about their reasons for buying. Some of these reasons immediately raise red flags for us:

• They want to own a home because they think it will impress their friends and family.
• They think owning a house will solve their marital, familial, or personal problems, not realizing that buying and fixing up a home is stressful and could actually put more strain on a relationship.
• They see owning a house as a crucial threshold to cross before they can feel like they’ve “made it” as an adult.

We would caution you from letting any one of these reasons act as your primary motivator for buying a home. For instance, if you want to own a home mainly to impress people, you might choose to buy the most impressive house the bank will let you buy, even if it stretches your budget far beyond what you can comfortably afford. That could introduce a lot of unnecessary stress into your life.

Another red flag pops up when we see people buying in a way that works against their personal timeline. What do we mean by that? Let’s say someone decides to buy a house knowing they’re likely to move again in the next two to three years. The costs of getting into and out of a home are so substantial that — unless you plan to flip it or the housing market is appreciating much faster than normal — you’re unlikely to make money unless you stay in a home for longer than a few years.

Beware of buying a property for your ego. Beware of buying a property to solve your problems. Beware of buying a home with the assumption that “owning” is always better than “renting.” You’re likely going to create complications for yourself, and you may end up losing money.

But if you’re ready to be a homeowner because it’s an appropriate time to put down roots and it makes sense for your family, that’s a great sign that you’re ready to buy. If you’re a real estate investor and you intend to buy smart — and you intend to turn a property into a home that will bless families in the future — that’s a great sign you’re prepared to make a good decision.

Are You Ready Financially?

Everything in this world is in a state of deterioration — just ask Einstein and his laws of thermodynamics. What does that mean, practically? It means repairs! Whatever property you buy is currently deteriorating and will continue to deteriorate as long as you stay there.

Houses have electricity and water running through them. They have wind buffeting them. They have birds making nests on the roof. They have bugs trying to get in through the windows. There are roots growing up into the plumbing. Everything in nature is actively working to tear homes down! You could go into homeownership with the best building at the best price, but you still cannot predict what might go wrong.

We know a woman in Tennessee who bought a beautiful craftsman home in a great neighborhood — we’ll call her Stella. Several months in, she started hearing squirrels in her attic, so she called pest control. They informed her that the squirrels would probably continue to get into the attic until she replaced her roof — a cost of around $10,000. Given that price tag, Stella decided she could live with squirrels in her attic a little while longer. Several months later, she discovered snakes in her yard and called pest control again. “The snakes aren’t so bad — they’ll take care of any rats and mice,” the same pest control man told her. “But if you’ve still got squirrels in your attic, the snakes are gonna get into your house.”

Stella paid the $10,000 to replace her roof. A year later, she had to go one step further and take out the squirrels’ tree. She’s still figuring out what to do about the snakes.

The point? You may get a great house, and you may have it easy. But you might also get a crazy property where stuff is constantly breaking down. Financially, you need to be prepared with a steady flow of side money that is available to handle these problems. If you don’t have that reliable income and savings, you should think twice before taking on the potential liability that is homeownership.

When you consider buying a home, keep in mind that while you’re living in it, that home will function more like a liability than an asset. The money that you put toward repairs will be substantial, and there’s no revenue coming in from it — no one’s paying you to keep up your home.

However, we don’t want to be complete Debbie Downers. There are a few ways for your home to produce financial gain:

1. You buy a property way under market value and restore it.
2. You buy in an area where there is steady appreciation, and you’re able to invest the money required to keep your property well-maintained. You stay in it for five years or longer.
3. You start with a solid first house, and eventually turn your first house into a rental property. For this to work out as an investment, your income in rent needs to be enough to cover the mortgage costs and any needed repairs required to keep the house in peak condition. At that point, your first house will turn into a financial asset that can help you accumulate wealth for your family.

Don’t Forget about the Time Factor

When you’re renting, you’re not responsible for the landscaping or upkeep — but as a homeowner, you are. That takes time. You’re the one mowing the grass, cleaning the gutters, and calling around to find a good contractor for the kitchen remodel. Your kids get older and want to change the paint color in their rooms — you’re the one doing the painting. You decide you want to install a shade awning over the back patio — you’re the one doing the research on the right one to buy.

As a renter, it’s far easier to disconnect from a space and live with it as-is, because the property isn’t yours. You wouldn’t spend your money on improvements because you’ll eventually move. But as a homeowner, it’s yours. You’ll come to take pride in your space, and you’ll desire to have it the way you want. That’s a good thing — but it does take time, creativity, energy, and money.

Will you be financially prepared to invest in the maintenance and repairs of your home, as regularly and ceaselessly as those needs will come? If you’re in a position to take those on, and you’re ready for the challenge they’ll present — that’s good. Keep reading.

Are You Ready with Your Knowledge?

Finally, if you’re thinking about buying, be prepared for the steep learning curve that comes with homeownership. There’s a lot to learn. Much of it, we’re going to teach to you in the following chapters. We want to equip you with all the knowledge you need so that by the time you sign the dotted line, you can be confident you’re committing to a great property, and you’ve gone about the purchase in a great way.

But that’s only the beginning. You’ll continue to learn about your particular property’s quirks and issues. You’ll continue to learn more about the financial tools you’ve committed to — their benefits and drawbacks. You’ll learn DIY repair tricks from YouTube videos (some will work; some won’t), and then you’ll learn even more when you eventually hire the expert to come out and fix your mistakes. If, down the road, you decide to turn a home into an investment rental property, you’ll need to learn a lot about how to be a good landlord. And still — these areas just scratch the surface.

If you’re ready to sign up for all that learning, then we have good news: establishing a home can be an incredibly meaningful process, especially when you’re doing it alongside people you love. We’ve tried to sober you in this chapter by sharing some of the bad news. We want you to be clear-headed and to dispel any romanticized ideas about home ownership that might lead you to make a decision you’re not ready for.

But if you are ready — then get excited. Making a property your home can be a profoundly beautiful experience.

You’re Probably Ready to Buy If…

• You’re strategically ready: you know why you want to buy a home, you’re well educated about your ideal location, and you’re in agreement with your partner about real estate goals.
• You’re emotionally ready: you recognize that you’re pursuing home ownership for reasons that are in line with your and your family’s larger goals, which make sense with your future timeline.
• You’re financially ready: you understand the financial risks of home ownership and have the financial scenario to take on this liability.
• You’re ready with your knowledge: The experience of home-buying and homeownership feels clear (we’re going to help you with this), and you understand the challenges that will come with owning a home.

If you’re able to affirm all four of those points, you can feel confident that you’re in a good position to move forward in this journey toward home ownership.

For more advice on the buying a home, you can find REAL Experience on Amazon.

Ben Walkley has been involved in more than 10,000 real estate deals as an active investor and the owner of The Fireland Title Group. A mentor and speaker, Ben is passionate about real estate and the impact a positive experience can have in his clients’ lives. Ben lives with his wife and their six kids in Medina, Ohio.

Kevin Wasie is the founder and CEO of Exactly Real Estate, a company with a unique consumer-centric business model and one of the fastest-growing brokerages in northeast Ohio. An expert in residential real estate sales and marketing, Kevin has an economics degree from John Carroll University. He’s a northeast Ohio native and lives in Akron with his two kids.