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Maybe You SHOULDN'T Buy a Home

Maybe you shouldn't buy a home. Yep, I said it. Even though I'm in the business to "sell" homes, some people shouldn't really buy a home now, or possibly ever. Renting may be a better option for some. Believe me, I'd much rather have a happy client than someone who regrets making the decision to buy.

the Thinker

So, maybe you think you want to buy a home. But make sure it's the right thing to do for you. Here are SIX things to think about:

1. Buying for the tax credit. Isn't it great that you can get a tax credit just for buying a home? Sure it's a great motivator (I wish it was there when I bought, as do thousands and thousands of other home owners), but it shouldn't be the sole reason to buy a home. There are so many other reasons. Ask yourself whether you still want to buy a home if you miss out on the credit. If you don't, you probably don't want to buy one anyway.

2. Can only afford a fixer but cant fix it. With many bank owned or distressed sales there is inventory available, often with major repairs needed. Just because you can afford the sales price doesn't mean you can afford the repairs. Before jumping into a "fixer," make sure you have the money, or resources, available to fix it. Otherwise, don't buy it.

3. It's "time." Reached a certain age? Got married? Had a baby? There are many life milestones where we are "supposed" to buy a home. Before jumping into home ownership, make sure that it's because you want to buy a home and not because of external or societal pressures. question marks

4. You make enough to pay monthly bills, but that's it. If you live paycheck to paycheck you probably want more financial security before buying a home. Home ownership involves much more than making your monthly mortgage payment. There are always unforeseen expenses, plus if your income is reduced or lost, and you don't have extra funds set aside, you could also become a foreclosure statistic.

5. Not motivated to maintain or pay someone to maintain your home. When you rent it's so easy to call your landlord to deal with a home issue. Once you buy it can be shocking to realize you have no one to look to except yourself. YOU will be solely responsible for your home. Even if you live in a condo complex, you will have things that you have to take care of. And you have to do it or pay someone to do it. If this isn't appealing it probably is better to rent.

6. See it only as an investment. Before the market changed many buyers bought so they could make a bunch of money as prices went higher. Didn't work out so well for some. Before then people bought homes with the intention of living in them as their home for a long time and not necessarily as an investment. Times have changed and people buy and sell every few years, so of course, home ownership and what it means changed too. Unless you're really an investor, however, buying only to increase your net worth may not serve you well.

Deborah Engel, Prudential California Realty, is a recognized San Diego and Carmel Valley Realtor for top client satisfaction. If you'd like to learn more about Deborah, visit her website, www.PropertyByDeb.com, email her, Deb@PropertyByDeb.com, or call her at 858-829-1989.

Posted by Deborah Engel, San Diego Homes & Property on 01/19/2010 11:51 PM

Comments (55)

Home Buying-Things to Think About in the Home Buying Channel

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55 Comments on Maybe You SHOULDN'T Buy a Home

JAN

2010

Yes one should be able to afford the home they are purchasing. Asuming they can home ownership is wonderful and the cornerston of our country.

I read a lot of things saying "Now is the time to buy."

I'd like to rephrase that.

"Now is a great time to consider if buying is right for you."

Thanks for sharing, Very informative. I enjoyed the post.

Yes there are some folks that should not buy a home but I still think It is great to be part owner with the bank in the American Dream! There is no better time to buy than now!

Outstanding post. To bad more people did not think this way a few years ago.

Deborah, for the financially irresponsible I would say this post is right on. But for those that are responsible, now is the best time in years!

Deborah, great advice. Some people do good things for the wrong reasons. Finding out a buyers motivation is always a good practice, and if the motivation isn't very clear or doesn't add up, tell them. You might lose that person as a client, but I bet they are good for a few referrals.

In a word it's not for everyone. It should be but there is a baseline of requirement personally and financially to make it fly.

Deborah,

Many people don't really give that much thought to why they want to buy a home before they get into the process. You've listed a good number of points.

Rich

As a mortgage banker I speak with folks every week that should not buy a home for the listed reasons and more

The hard reality is even if you don't own a home , you are making a mortgage payment called RENT !

Hi Deborah,

I agree with you. Not saying that lenders are evil, but their business is to loan money, and as a result of that business, they will loan you every dime you are good for ;). It's business. Clients need to own the home, not have the home own them.

all the best

I always try to present the positives about why it is a good time to buy (or sell, depending on what it allows you to do on the other side, example - buy at a good price, free up cash, etc) with a disclaimer of sorts - "depending on your particular situation".

Deborah:

It's "time" is not a good reason. That is similar to it's time to get married or have a baby. The only time to do any of these things is when or if it the right thing for your life. You should not be pressured into buying a home.

It's so important to know the motivation of your buyer. Understanding that motivations may change mid-stream is another "biggie" to look out for. This is a really good reminder for agents to re-group every couple of weeks/months to see if their buyer's search criteria remains the same and/or if their priorities have changed. Great topic.

It's true, a lot of the trouble we're in now could have been avoided if people who shouldn't have bought hadn't bought. It was driven by an absolute glut of money worldwide available to invest -- those investment bankers had to figure out where to put it, and mortgages was it (even if people had no real place getting that mortgage anyway).

I've talked people out of a lot of opportunities to buy when I felt, for one reason or the other, that they weren't ready to buy. I think it is certainly part of our duty. Great post!

Deborah,

Excellent post. You have your clients best interest at heart.

Depending on an individuals situation and circumstances....that's when it's a good time to buy.

Mark: I think it's so easy for people to believe they can afford a home when the reality is they can't.

Amy: I like the rephrase. You never hear that one.

Jeff: Thanks for reading and commenting!

MarkV: I agree that now is an awesome to buy. Unfortunately for some it isn't.

Tom: Yes. I think everyone just got caught up in the excitement. When reality kicked in that's when people started realizing what a mess they were in.

Douglas: Thanks Douglas!

Dan: Yes, it's something I have to remind myself all the time (to find out motivation). If we do it with sellers when they want to sell we should also be doing the same with buyers.

Deborah,

You are so right with this one. I have a family member in this category. I, as well as the rest of my family, want him to buy but not sure he really wants to take the plunge. And (as to your point) that's OK.

Frank: I agree. Unfortunately, the fantasy of owning a home doesn't always make for good reality.

Richard: Thanks Richard. I think it's so important for a buyer to truly want and be able to buy. So many buyers forget this.

Tony: Oh, I'm sure you see plenty of this. I can't even imagine....

Michael: True, but for that rent you have no responsibility. Plus, monthly rental rates are usually lower than a mortgage.

Bill: Yes, there are some lenders like that, but there are plenty of those that arent. It's just like saying there are agents who will sell anyone a home, even if it's not right for them, because they are in the business of selling. Thank goodness there are both good lenders and agents who have a client's interest in mind.

Susan: That's a great approach.

Claudette: I agree. There are so many people that feel this pressure.

Marcie: Thanks Marcie. I think being a great agent includes asking the questions that help the client make the right decision for them.

Bob: Unfortunately it ended up being a bad thing. But, we have a great opportunity to learn from it.

Joseph: Yes, I've spoken to buyers too about this. If they really want to buy I help them figure out a plan for buying if the time isn't right now.

Jeana: Thanks, I try!

Sally: Yes-completely!

Todd: So, you're seeing this up close and personal.

Deborah, I commend you for writing this post. I think you make several important points, and eho what many people are thinking. The $8000 tax credit is a great motivator. However, if now is not the time, I think potential buyers should look at their lifestyle and find ways to cut back. I know it's something I need to do. If a potential buyer decides to wait a year, they can save a considerable amount of money on cutting back on the small things (Starbucks, dry cleaners, eating out, etc). If one decides to rent, lease a property for less than what you want to pay in a mortgage. Save the difference and you can have a significant amount saved for a down payment.

Those are all good points. The buyer has to be committed to a longer term move now.

Deborah, you make some excellent points here. I actually tlked 3 family's out of moving last year because they really had no plausible reason. In fact a number of my neighbors and friends were very surprised by my actions but really, not all brokers and agents are around just to seel a house!

Deborah, I totally agree with your article. There are some people that timing is not right for them.

Excellent post with great points. Owning a home is not for everyone and just because there is a tax credit does not mean it is the right time for all to buy. Thanks for sharing.

As someone who sells investment property I am all for people renting. I do also sell owner-occupants, but I see so many people who should be renting, especially those who are in jobs that are in jeopardy.

Great tips! Thanks so much for posting. The title certainly pulled me in.

I think about this a lot. Many Freedoms come with Home Ownership but burdens as well.

Debirah,

Although the key to wealth building in this country has been home ownership. Some people just do not want the responsibility. Happy serving and selling in 2010!

I have had my real estate license since 1983 and for the last 12 years, I have been a renter. My husband and I evaluated our lifestyle and decided it was the best option for us. We are empty nesters, we love to travel and be spontaneous. We have been able to find wonderful long term rental properties that fit our needs for very little money - and we don't have to save back any money for possible repairs or improvements. A bit unconventional for a real estate agent - but it works for our lifestyle.

When is the best time to buy is all individual. Everyone's situation (all things concerned) are different.

Patricia/Seacoast NH

Deborah - I have a friend who lived for years in a three story rented brownstone. Then one day he said he wanted to move out of the city to the peace and quiet. Bought a home and 6 months later him was sick and tired of the upkeep of the house and yard. As you said "not motivated to maintain his home". He is back in the city in a loft and is happy as can be.

Good Post.

Deborah,

Great post, it's all a matter of what truly works for the clients. I am building a life long business, not just out for the sale.

I think we are going to see more and more people who can "afford to buy", sit it out for a good number of reasons you've mentioned.

I've had one tenant in an executive rental house for 5 years now. He's awesome, so if they want to stay another 5, that's great for me.

All the best, Michelle

If we all acted as consultants and not salespeople...think of how much more successful we'd be collectively :).

Great post - it will help convert internet prospects into your clients!

Deborah - this is an excellent post and you are right about the fact that if someone can only afford a fixer, but cannot afford to fix it. I have seen that many times!

Nice. These are all good reasons NOT to buy!

Amen to number 2! Too many people don't realize that it takes cash to fix houses up. If you can't afford to fix it than please don't buy it.

Great post!!! I have told more people not to SELL than I have not to BUY, but great thoughts...

Great list. There are a lot of people that really shouldn't buy... regardless of what is happening in the larger world. It is about time that more of us admit it.

Deborah these are certainly important things that buyers need to think about and we need, as REALTORS,to make sure they think about.

Absolutely accurate and right on list. People need to make sure that they are doing it for the right reason, it's a BIG deal to buy a home.

Deborah, you're right. Not everyone should buy a home. Two years ago an ex-roomate and former co-worker called me wanting me to help her buy a home. Even though she was only 46, she hadn't worked in about three years because of 4 back surgerys. She had just gone to court and gotten disability which was only going to pay her about $900 a month, which meant she could only afford a mortgage of $350 to $400 a month.

After looking at what she could afford, I told her she would be better of continueing to rent. Even if she found a home in her price range in a decent neighborhood in decent condition (unlikely) she would not be able to afford repairs if anything broke. I needed the commission, but I will not talk someone into buying a home if it is not the right choice for them. I have my principles, and I still have her friendship!

Will: Very true. I wish I had the willpower to do all this sometimes. It can be tough to give up the daily comforts in order to save.

Chuck: Thanks! Commitment is the key.

Russell: I agree. We should be able to look at a person's situation and give our best advice, whether good or bad news.

Ted: Thanks Ted. Yes, for some people the timing may be better later, or never at all.

Raylene: I often hear people say that they have to buy before the tax credit expires, not thinking about what they will do if the tax credit expires and they still haven't found a home.

Joe: Sometimes renting makes more sense for people. And of course, investors would be have to have the renters.

Jeff: Thanks! Appreciate the feedback on the title.

Trevor: The burdens are the ones that most people seem to not know about, avoid learning about or forget.

Karen: The responsibility is the difficult part for some.

Ann: It's great that you figured out what was best for you. The first time I heard this concept was from an investor who had a lot of properties, but chose to rent. It was hard to comprehend at first until he explained his reasons.

Patricia: Absolutely. It is such an individual decision.

Brian: That's good that he was able to do that once he realized it. There are a lot of people who aren't that lucky to have the flexibility.

Michelle: The motivation to establish lifelong relationships is key to helping people make the correct decision for them.

Lisa: I'm glad that some of us can also act as a consultant.

Sharon & Damon: I have too. Unfortunately, cost estimates to fix things up end up being so much higher than expected.

Erica:Thanks!

BethAnn: I have too. Sometimes it's hard to think about telling a buyer that it may not be a good time to buy-it just isn't what we always think about. With sellers they usually specifically as if they should sell but buyers usually just tell us they want to buy (not ask us whether they shoud).

Lane: I think with the fallout from the past several years there are more people willing to say it and admit it.

Dana: Yea, I agree. We should make sure that buyers have a chance to think through these things before committing to buy (or look at) a home.

Judi: It really is. I had no idea until I became a home owner. 8 years later and I'm still learning about home ownershipl.

Ann: You sound awesome. What a great thing you did (and the right thing). How lucky she is.

You've definitely given potential buyers some good questions to ask themselves before they decide whether or not they should move forward.

Deborah:

These are some excellent questions that potential buyers should be pondering. Despite the fact that home ownership IS the America dream, or one of them, it is NOT necessarily right for everyone. There is nothing wrong is saying that being a home owner is not what you want. By the same token, being a home owner for the wrong reasons, or not understanding or caring about the responsibilities is a problem.

Jeff

JAN

2010

i agree with you- some poeple would be better off renting and I have expressed that to buyers- I tell them that I am happoy to work with them but they should spend some itme and see if that is what they really want!

Spectacular job with this post Deborah!

It's clear that you're looking out for your client's best interest and not yours.

Well done!

Great post Deborah! you really are putting your prospects first by suggesting they shouldn't buy a home (at this time).

JAN

2010

I could not agree with you more. Not everyone is cut out to be a homeowner, and there is no shame in that. Unless you have the financial security to deal with repairs when needed they can be a real source of stress in an already stressful life that most of us live.

FEB

2010

Deborah,

I live in Canada, am a licensed realtor in Victoria BC. I have clients who have expressed an interest in buying an investment property in San Diego. The will be visiting late May on their honeymoon.

What is the market like in your area? They would be looking in the under $500,000 range. They are in the 50ish age group, professionals, who like to sail.

What are the pitfalls of being a Canadian buyer, also what is the rental market like in your area?

Thanks very much for your time.

Sandy Berry, Newport Realty, Victoria BC, 250-818-8736 cell

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Deborah Engel, San Diego Homes & Property

San Diego, CA

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Prudential California Realty

Cell Phone: (858) 829-1989

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