-
Selling Your House: Here’s Why You Need A Pro In Your Corner!
With home prices on the rise and buyer demand still strong, some sellers may be tempted to try to sell their homes on their own rather than using the services of a real estate professional. Real estate agents are trained and experienced in negotiation while, in most cases, the seller is not. […]
-
5 Reasons Why Millennials Buy a Home [INFOGRAPHIC]
Some Highlights: “The majority of millennials said they consider owning a home more sensible than renting for both financial and lifestyle reasons — including control of living space, flexibility in future decisions, privacy and security, and living in a nice home.” The top […]
-
Buyer Demand Surging as Spring Market Begins
Last fall, some predicted that the 2019 residential real estate market would be a disaster. There was even belief we might experience a housing crash like the one that occurred during the last decade. However, according to two separate reports*, buyer demand dramatically increased over the last […]
-
Are Low Interest Rates Here to Stay?
Interest rates for a 30-year fixed rate mortgage have been on the decline since November, now reaching lows last seen in January 2018. According to Freddie Mac’s latest Primary Mortgage Market Survey, rates came in at 4.12% last week! This is great news for anyone who is planning on buying a […]
-
Homeowners: Now Is A Good Time To Sell Your House
Every month, the National Association of Realtors (NAR) releases their Seller Traffic Index as a part of their Realtors Confidence Index. In the latest release, NAR reported that homeowners have been reluctant to sell their houses. This is reflected when broken down by state. Only 11 states have a […]
-
3 Questions You Need To Ask Before Buying A Home
If you are debating purchasing a home right now, you are probably getting a lot of advice. Though your friends and family have your best interests at heart, they may not be fully aware of your needs and what is currently happening in the real estate market. Ask yourself the following three […]
-
Slaying the Largest Homebuying Myths Today [INFOGRAPHIC]
Some Highlights: The average down payment for first-time homebuyers is only 6%! Mortgage interest rates have been on the decline since November! Hop in now to lock in a low rate! 88% of property managers raised their rents in the last 12 months! The average credit score on approved loans […]
-
Home Value Appreciation Stops Falling, Begins to Stabilize
The percentage of home price appreciation on a year-over-year basis has decreased each month for over a year. The question was how far annual appreciation would fall. It seems we may now have the answer. In a recent post on the National Association of Realtors’ Economists’ Outlook Blog, […]
A FIRST-TIME HOMEBUYERS’ DILEMMA: WHEN GETTING IT RIGHT DOESN’T WORK
By Chuck MacPhee
In my last post, I detailed all the ways to help secure your dream home as a first-time buyer.
But what happens when you do everything right—work with a competent agent, get your preapproval and go through the full mortgage underwriting process—and still don’t get your dream house?
I’d like to say this scenario will never happen but the reality is that it’s actually very common and often no one’s fault beyond the market. A lot of places across the country are experiencing strong seller markets, with homes often receiving multiple offers within the first few days (or hours) they are listed.
This type of market can be frustrating to say the least. Here are some ways to handle a tough seller’s market as a first-time buyer:
1. Keep it simple, especially if there are multiple offers.
Even though you may absolutely love those custom drapes or want that little handmade coffee table in the corner of the living room, sellers may be reluctant to part with their personal items (and there’s no rule that says they have to). I highly suggest keeping an offer very clean and straightforward without too many requests of a seller. Another way to consider strengthening an offer is to remove some of the cookie-cutter contingencies that every other buyer is going to have in their offer. For example, if you have already been through your lender underwriting processes and all you are waiting on is that dream home, do you really need a financing contingency? If financing isn’t an issue with the bank, let the seller know you have your act together and are strong buyer. Of course, each market is different and your local REALTOR® is the best source for advice on this topic. Be sure to discuss this issue with him or her to make sure your best interests are taken care of. My advice: Come prepared with just an appraisal contingency if the “financing” piece is no issue. It’s one less thing the seller has to worry about. Again, this goes back to my initial concept: The cleaner the offer—with less strings attached—the more likely it is that a seller will choose you over the other buyers vying for the property.
2. Don’t lose your home over a latte.
Now, don’t get me wrong, I’m not downplaying the significance of buying a home. I know in many cases we are talking about the largest financial investment you may ever make in your life and every penny counts … sometimes. With most of the country seeing pretty steady price appreciation, if you are in a “hot” market it’s not uncommon to see prices push beyond the comparable sales in the area, which may make it feel like you are paying “too much” for the home. I know paying an additional $5,000 for your first home house sounds like a lot, but when you really break it down, you may be losing your dream home over the price of a latte. How do I justify a $5,000 latte, you ask? Well, let’s assume the scenario is this: Your offer on a home is $300,000 with 20% down at 4% interest. Not factoring any additional expenses (such as insurance, taxes and so on), the difference in payment per week is actually $4.32, or about the price of a latte.
| Scenario 1 | ||
| A | B | |
| Purchase Price: | $300,000 | $305,000 |
| Monthly Payment (20% down)*: | $1,038 | $1,055 |
| Difference in Payment per week | $4.32 | |
*Assuming 4% interest rate with 20% down. No additional expenses factored in. For illustration only.
Now, let’s say the market continues to improve and you lost the home at $300,000. Prices rise and interest rates climb. The difference in the monthly payment from “B” in Scenario 1 above to the new reality in Scenario 2 below is approximately $186 per month or $46.52 per week. Personally, I’d much rather give up a latte per week than almost $50. Wouldn’t you agree?
| Scenario 2 | ||
| Purchase Price: | $325,000 | |
| Monthly Payment (20% down)#: | $1,241 | |
| Difference in Payment per week | $46.52 | |
#Assuming 5% interest rate with 20% down. No additional expenses factored in. For illustration only.
3. When all else fails … get creative!
Despite you and your agent’s best efforts, there are still times when it’s just not meant to be and you lose the home. When this scenario occurs, it’s time to get creative. Send a personal letter to homeowners in the area or community you want to live in. Tell the homeowner their home is just the kind of property you’re looking for and ask if they know of anyone in the neighborhood who may be thinking of selling their home. You’ll be amazed at the response you get when you make things personal and let homeowners know you’re serious about buying. You can also have your agent reach out to any homes that may have been on the market in the past and did not sell. With prices up in most markets, it may be the perfect time to reach out to potential sellers and give them that nudge they need to list the home. Whatever you do, remember creativity in real estate can go a long way, and help you land your dream home. So if you’re feeling frustrated, hang in there! Your dream home may be just around the corner … all you’ve got to do is ask.
CHUCK MACPHEE is a licensed REALTOR® with Berkshire Hathaway HomeServices Georgia Properties. He’s also a luxury homes specialist and member of the REthink Council. Visit his website: www.macpheerealty.comor find him on Twitter @ChuckMacPhee.
