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Pop Quiz: Can You Define These Key Terms in Today’s Housing Market? [INFOGRAPHIC]
Some Highlights The language of buying and selling a home may sound scary at first, but knowing how key terms relate to today’s market can help you. For example, current low mortgage rates and higher wages positively impact affordability for buyers, while home price appreciation […]
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Today’s Real Estate Market Explained Through 4 Key Trends
As we move into the second half of the year, one thing is clear: the current real estate market is one for the record books. The exact mix of conditions we have today creates opportunities for both buyers and sellers. Here’s a look at four key components that are shaping this unprecedented […]
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Remote Work Has Changed Our Home Needs. Is It Time for Your Home To Change, Too?
Over the past year, many homeowners realized what they need in a home is changing, especially with the rise in remote work. If you’re longing for a dedicated home office or a change in scenery, now may be the time to find the home that addresses your evolving needs. Working from Home […]
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3 Charts That Show This Isn’t a Housing Bubble
With home prices continuing to deliver double-digit increases, some are concerned we’re in a housing bubble like the one in 2006. However, a closer look at the market data indicates this is nothing like 2006 for three major reasons. 1. The housing market isn’t driven by risky mortgage […]
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What You Should Do Before Interest Rates Rise
In today’s real estate market, mortgage interest rates are near record lows. If you’ve been in your current home for several years and haven’t refinanced lately, there’s a good chance you have a mortgage with an interest rate higher than today’s average. Here are some […]
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Experts Agree: Options Are Improving for Buyers [INFOGRAPHIC]
Some Highlights Buyers hoping for more homes to choose from may be in luck as housing inventory begins to rise. Many experts agree – new sellers listing their homes is great news for buyers and the overall market. Although the supply increases are modest, more homes means more options […]
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Diving Deep into Today’s Biggest Buyer Concerns
Last week, Fannie Mae released their Home Purchase Sentiment Index (HPSI). Though the survey showed 77% of respondents believe it’s a “good time to sell,” it also confirms what many are sensing: an increasing number of Americans believe it’s a “bad time to buy” a […]
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Housing Supply Is Rising. What Does That Mean for You?
An important factor in today’s market is the number of homes for sale. While inventory levels continue to sit near historic lows, there are indications we may have hit the lowest point we’ll see. Odeta Kushi, Deputy Chief Economist at First American, recently said of our supply […]
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.
