REAL ESTATE TOPICS...The Most Important Home Buying Advice You'll Never Hear From a Realtor

By Joshua Becker

I’ve moved five times since college. With each move, I have sought the advice of a local realtor. They have provided important insights into neighborhoods, housing trends, and home prices. And each time, they have taken a genuine self-interest in my family’s well-being.

Our interaction typically begins with a series of questions: What are you looking for in a home? Are there any specific locations you have in mind? Are you pre-approved for a loan? How much are you looking to spend?

With this information, a realtor is prepared to make recommendations and offer advice—usually based on the dollar amount a buyer wants to spend.

In this scenario, “What can you afford?” has replaced “ What do you actually need?” as the starting point for most home buyers. This rationale has gotten us into deep over-housing problems, on both a macro and micro-economic level.

For that reason, I want to offer you the most important piece of home buying advice you’ll never hear from someone else:

Buy only the home you need, not the house you can afford.

Too often, when people begin the home buying experience, the mantra of our society comes calling, “buy as much and as big as possible.” It seems, whatever dollar amount the financial institution has approved to spend on a home becomes the price range they begin searching in.

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For example, if based on income, a buyer is pre-approved for a $250,000 loan, most buyers begin searching for the biggest house they can find for exactly $250,000. This thinking is often encouraged by the realtor and the financial institution. And why not? The larger the sale, the greater their profit.

Buyers soon create a list of “wants” for their new home while “actual need” is quickly erased from the formula.

In purchasing homes, we are told repeatedly (in both subtle and not so subtle ways) that “bigger” and “more” is better. As a result, the average American home has tripled in size in the last 50 years—and they only continue to expand. With little regard for the negative consequences, buyers continue to purchase bigger and bigger homes, whatever size their income allows.

But the impact of this thinking has detrimental effects on our well-being. We typically use only 40% of our living space with any regularity. Meanwhile, the increased debt contributes to mental and emotional distress. And the excess space carries additional financial costs—whether we are using the square footage or not.

More is not always better. There are benefits to living in a smaller home. A smaller home is easier to maintain, less expensive, assumes less financial risk, results in less environmental impact, and frees up our resources to pursue other passions in life.

Buying a home is a very personal decision that weighs a large number of factors. And only you know all the variables that come into play when making that decision.

But too often, the most important piece of home buying advice is the one we hear from realtors the least: Buy only the home you need, not the house you can afford.