Better to buy small than not buy a home

Locked out. That's how many people tired of renting feel about their chances of achieving the classic American dream: a spacious detached house with greenery on all sides and perhaps a picket fence.

Escalating home values mean more would-be buyers must settle for a small home or forgo a purchase altogether.

Given the choice, it's usually better to buy - however modest the place may be - than to postpone your purchase plans entirely, says Leo Berard, charter president of the National Association of Exclusive Buyer Agents.

There's always the option of acquiring more space by purchasing a home in a distant suburb or even a rural hamlet. But that solution has drawbacks, says Clarinda Gill, a veteran Re/Max broker. An increase in commuting times, along with the absence of amentities, makes this an unappealing choice to many.

Parents with an intense focus on education for their children are increasingly willing to accept a smaller house with prime public schools nearby rather than a bigger one in a neighborhood with less impressive schools. Are you convinced that buying a small home is your best or only realistic option? Then these suggestions could prove useful:

Follow the "two-two rule" whenever possible. In the locale of your choice, your budget may limit you to a place much smaller than you'd like. Even so, Gill urges you to strive for a home with at least two bedrooms and two bathrooms. A second bathroom and a second bedroom are vital to resale potential, she says.

Recognize the importance of a garage. Obviously, not everyone on a limited budget can afford a place with a garage. But Berard, who co-owns an independent realty firm, says a garage is a strong enhancement to resale value.

Consider a small one-story home over a two-story place of equal size. Demand for single-story homes is starting to outstrip supply in many communities because the number of people in the 55-plus age category is expanding quickly. Many of these folks worry about their ability to negotiate stairs in the future. Also, rising land costs means builders are constructing fewer ranch-style houses. They're building more two-level houses because a smaller lot is needed to yield the same square footage.

Seek a home with potential for expansion. Perhaps you consider your best option to be a small place in a well-respected neighborhood. Then look for one where you (or a future owner) would be permitted to put an addition on later. This will improve your resale prospects. Simply contact local government offices and ask about zoning regulations governing additions in your preferred neighborhood. Alternatively, your real estate agent could make these inquiries for you.

Beware of the possibility of rising condo fees. Are you a first-time purchaser expecting to buy a condo-apartment or townhouse? Remember that nearly all such complexes have associaitons that oversee the upkeep of shared parts of the community, such as a clubhouse or pool. "Condo fees can get out of control. You don't want to get stuck with higher fees than you expected," Berard says. To avoid surprises, Berard recommends that you ask association leaders whether monthly fees have been ascending or are likely to doso in the future. "If you don't have enough gumption, your agent should do this for you," he says. Besides the trend in monthly condo fees, you should inquire about the possiblity of "special assessment" due to deferred maintenance, Gill says. Such levies can run several thousand dollars per owner and are especially probable in older communities.

Question residents about the realities of a place where you may live. If a small place is all you can afford, the chances are greater you could find yourself living in close proximity to others. Besides knowledge of specific residents and their quirks, you'll also want information on the quality of services. Is the garbage picked up promptly or allowed to sit around? Do teen drivers habitually careen through the neighborhood at night? "If the neighbors are unfriendly, that's a big red flag," Berard says.

Article published in the South Bend Tribune, written by Ellen James Martin

Article published in the South Bend Tribune, written by Laura Nirenberg