Jim and Joyce Reyes found a three-bedroom house that met their needs and entered into a contract with the seller at a mutually agreed price. But when the appraisal came in for less, the sellers wouldn't drop the price because they owed more on the house than it was worth.
The Reyeses, who began house-hunting in September to take advantage of the first-time homebuyer tax credit, kept looking. They found another house, signed a contract but, after paying for an appraisal and a home inspection, that deal fell through as well.
They missed the April 30 deadline to have a signed contract in place to qualify for the $8,000 tax credit.
"I kind of hate to miss out on the tax credit," says Jim Reyes, of Farmington. "But I didn't want to just roll over and buy a house based on that. I wanted to make sure we buy a house that fits what we need."
Would-be buyers like the Reyeses who are ready to buy a house are frustrated if the seller is underwater, or they lose out to other buyers who place an offer first or can pay more, or they can't agree on terms with the seller.
Some buyers who missed the tax credit deadline feel as if they were left on the dock, trying to get their gear ready, while the ship left.
"My advice for buyers is: Be somewhat encouraged. The homebuyer tax credit artificially propped up housing on crutches. Those crutches are going to be kicked out," says Matthew Schoenhardt, an agent with Realty Works in Canton and the Reyeses' agent. He predicts "more stabilization" of residential real estate in central Connecticut.
Ready To Act And Realistic
Informed buyers who are familiar with what houses in a given neighborhood with similar features and square footage are selling for can move quickly to make an offer, he says.
After all, motivated sellers who haven't sold their house might be more willing to deal so they can to capitalize on the spring market and snag buyers ready with pen in hand.
Buyers can improve their chances of finding a house they can live in by being realistic about the local market and prioritizing their needs and wants.
Some buyers hearing the national real estate news about this being a buyer's market think they have plenty of time to present an offer after a house goes on the market, agents say, but starter and move-up houses in the most sought-after towns still sell quickly when they're priced right.
While prices have fallen from the highs of 2007, Connecticut is still one of the most expensive real estate markets in the country. Prices didn't skyrocket in the Land of Steady Habits the way they did elsewhere, so they did not plummet as dramatically as those areas.
House sale prices in the state jumped 8.1 percent in March, compared to the previous year, the fourth straight month of rising prices, and the number of sales spiked by 37 percent, according to The Warren Group, which tracks New England housing trends.
But the recovery was uneven across the state's eight counties, with prices falling in Middlesex, Tolland and Windham counties.
If buyers are "not from Boston, New York or Southern California, then they're suffering from sticker shock. That has been true. That will continue to be true," says veteran agent Charlie Hartigan of Coldwell Banker in Avon. "Prices, like boats in a harbor, all rise and fall with the tide."
"There are signs of improvement everywhere, but for buyers, the planets are still very much aligned."
Interest rates have crept up since December but are still at historic lows. And while some sellers think their house is immune from economic conditions, there are motivated sellers who have to sell because of a job transfer, the need for a bigger or smaller house, a death or a divorce.
No 'Perfect' House
The perfect house does not exist, regardless of your budget.
"I've shown $2- and $3-million homes, and people don't think they're getting enough house," Hartigan says. "Everybody expects more than they're going to get. People expect higher quality, more square footage, a better yard or a better neighborhood. My mantra is if you can get 85 to 90 percent of your criteria, you're doing better than most people. ... I can count on one hand the number of people who are excited the first time they walk into their house and say, 'This is it; this is exactly what I wanted.'"
Broker Debbie Battista, owner of Domus Realtors in North Haven, has clients fill out a needs analysis questionnaire, stating their top priorities and areas open to compromise. For example, they may tolerate a 1950s kitchen in order to get a bigger house in their chosen neighborhood.
"I'm constantly telling clients, 'This is just a stepping stone. Your housing needs are going to change,'" she says. "I find that the people who are much more willing to compromise get better deals. If they can look beyond cosmetics and look at the bones of the house, with very few dollars they can turn that house into something that's equity rich."
Hartigan has each half of the couple make a list of priorities on separate pads, then they switch lists and see what needs and wants they share. He suggests they work from the combined list to set priorities.
Sometimes buyers discover their true priorities are different than what they first thought. One couple told agent John Lepore that central air was essential, but they ultimately bought a house without it and planned to use window air conditioners until they could afford to install central air.
In six weeks of looking, they had been unable to find a house that met all their top criteria in their target neighborhood and price range. "So they ended up compromising," says Lepore, with Prudential Connecticut Realty's West Hartford office.
Meanwhile, the Reyeses are still looking. They need a three-bedroom house because they have one child and Joyce Reyes' mother lives with them. They're not particular about housing style, but they've found that their $300,000 budget doesn't get them a house in move-in condition.
"If I'm going to pay $300,000 for a home, I don't want to put another $50,000 into repairs," Jim Reyes says. They'd like to stay in Farmington because their son is in school, and they'd like a first-floor bedroom because his mother-in-law is handicapped.
"Right now, I'm very frustrated," Reyes says. He still wants to buy a house, even without the tax credit. "To me, real estate is a very good investment. I'm spending money on rent that I could be paying the mortgage with. I'd love to be a homeowner."
Copyright © 2010, The Hartford Courant
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