Q: I’ve been looking for my first home for several months now. In my price range, it seems like there are fewer and fewer good homes available. When I first started looking, there were lots of houses, although they were hard to get because so many buyers would be trying to get them. Now, it seems like the same beat-up houses that no one wants are pretty much all that there is, and every once in awhile a good one comes up and sells really fast. I’m getting frustrated, and sometimes I even think about giving up. Is this all in my head?
A: Nope. Pickings, my friend, are slim. I’m no oracle, so I can’t say I know why inventory is so gnarly, but it is. This is one of those nuanced things that you can’t tell from the data — the market update numbers in most areas show plenty of homes on the market, but the reality is that much of what is out there in the entry-level price ranges is less than desirable.
Not only do the numbers of homes on the market not reflect what’s going on, neither do the days-on-the-market statistics. The less-fabulous homes stay on a really long time, but the great houses that come on the market fly right off. These extremes cancel each other out, requiring a more sophisticated approach to the data, if you want it to be meaningful or usable at all in your decision-making.
It’s time to press your mental rewind button and refresh your memory as to why you decided to buy a home in the first place. What was the vision you had for your life as a homeowner? More room for the kids? The ability to entertain in style? Were you motivated to break in at a time that, as tough as it may be, is quite favorable for buyers, relatively speaking? When you get frustrated or think about giving up, you should go back to your original motivations.
If they inspire your passion sufficiently, they’ll help you power through your frustration. If they aren’t very inspirational, then you might not be far off in deciding to wait and circle back to this later: Buyers who aren’t very motivated or don’t have a strong sense of urgency are unlikely to just fall into a place that they love on today’s market. Homebuying is hard work these days.
However, if you do decide to give up or wait, be very aware of what you may be giving up. There’s a lot of debate about where prices and foreclosure trends are going in the near future, but there’s consensus that interest rates are going up and lending guidelines are getting even tighter.
Also, the homebuyer tax credit is not long for this world. A decision to give up could very well be a decision to forfeit all of these pro-buyer market conditions.
On the other hand, if you decide to move forward, it’s equally important to get a handle on your wants and needs, and be more aggressive about compromising on things that aren’t really must-haves and deal-breakers. Get and stay clear on what you truly want and need and perhaps be a little more open to fixing — plan to use your tax-credit funds to do the painting, carpeting and other cosmetic finishes that can reveal the diamond in the rough. …CONTINUED
I have a number of clients in similar situations. I see them grow more and more concerned and impatient when they can’t find any houses that work for them, then still hesitate before making offers on the places that would fit their needs. If that’s you, here’s my advice: Don’t hesitate.
When you see a place that would work for you, make an offer — decisively and quickly. And don’t pinch pennies or agonize over a thousand dollars one way or the other — be aggressive in your timing and your pricing, and you’ll have a much better chance of success.
If you’re wanting to be aggressive without overpaying for a home, make sure that you and your broker or agent work through the statistics in an intelligent way. When you analyze comparables, look at homes that are very similar to your desired home — not just in location or specifications, but also in curb appeal, upgrades and general level of appeal. For those homes, get clear on their list-price-to-sale-price ratio: How much did they sell for compared to what they were listed for?
This can help ground you in reality — helping create a comfort level about offering more than asking and also a wise boundary so you don’t offer too much — when it comes to getting aggressive about making an offer on a great home, when one comes on the market.
1. Revisit your motivations for buying in the first place and either recommit to the process or move on, with a full understanding of what you are giving up.
2. Be decisive and move swiftly to make a strong offer, when you find a place that would meet your needs.
3. Be ready to compromise, and plan to put your tax-credit money to use bringing the cosmetics of your home in line with your vision.
Tara-Nicholle Nelson is author of "The Savvy Woman’s Homebuying Handbook" and "Trillion Dollar Women: Use Your Power to Make Buying and Remodeling Decisions." Ask her a real estate question online or visit her Web site, www.rethinkrealestate.com.
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