10 mistakes buyers make | Part 2: Choosing the right house

6. Small house mistakes

By Rona Fischman
September 12, 2008

No matter where you buy, this equation will always apply: size + condition + location = price.

When one of these elements dominates the equation, you'll need to cut back on the others.

Premature need to sell

Smaller properties have a tendency to become less useful over time. We fill them up and get the urge to "trade up." If you expect to need more space within five years, the property is too small.

Consider the costs of buying and selling: lender fees, inspection fees, legal fees, the dreaded real estate commission, moving costs, repair costs, and the interest on your mortgage. Don't forget to consider your time and stress. Trading up, as a short-term strategy, is rarely worth it.

Smaller properties are harder to sell in a down market

If a buyer has a choice of a two-bedroom condo or a one-bedroom condo in a down market, the buyer is more likely to choose the two bedroom unit unless the one bedroom is much cheaper or nicer. This is true of small places of all sorts: one-bedroom condos, two-bedroom houses, and multifamily homes.