How many times have we heard in recent years that it's a buyer's market? That buyers are "naming their price". Well, those stories were written by news reporters, not real estate professionals. Let's clear up some of the myths about what has been happening the real estate market generally since the middle of 2008.
1. sellers are desperate and should jump at any offer. This might be the case but in reality it's an impractical approach to purchasing a home. Yes, your interest is wanted, needed and appreciated. However, in order to even get you to the house that seller had to price his property competitively so that you would consider a closer look. If the house is worth $100,000 on the market today and he priced it at $175,000, you would see the listing and imagine that he is unrealistic, stubborn, and probably decide not to waste your time. We can't expect to penalize those sellers who "get it". Any seller who lists his home for sale today is a brave soul. That seller knows that he is going to "lose" equity that he would have otherwise enjoyed in the height of the market in 2007. He probably needs to sell - maybe he has to move for a new job. Odds are that if a seller is competitively priced to the point that you would even consider a closer look, he is pretty close to market value. I've had buyers contact me saying they want to find a house but it "has to be a really great deal". They give examples like $100K homes that they can offer $70K. These are not buyers who ever see the inside of my car. Seriously? Does it really make sense that someone who wants or needs to sell at $70,000 would ask for $30,000 more? In 11 years of real estate practice I have NEVER seen an appraisal come back that much higher than the contract price. You can listen to all the water cooler talk you want at the office but the fact remains, a buyer's perception of value is not always rooted in reality. You can say that you got a $200K house for $150,000 but there is a good chance that it was $150,000 or close to that when you found it for sale and your "$200K" value is based on height of the market pricing which has no relationship to value today.
2. Why would I put my house on the market now? From a real estate professional's standpoint, this is as good a time as any to sell if you are buying another home. In the sale of residential real estate it is amazingly rare for an individual to get top dollar on his sale and then purchase again at the bottom of the market pricing. You are going to generally "make out" on one side or the other, not both. If you are an individual who wants to move, whether it be to downsize, move closer to family or work, or maybe buy a bigger home, waiting until prices are at the top again only accomplishes one thing for you - the passage of time. When your home price goes back up the homes that you are buying are also going to be back up.
3. What determines how much a house is worth? Recent sales of comparable homes in the area.
4. If I sell my home today, I can price it higher than the short sales and foreclosures right? Wrong. Well, you can, but if you expect to attract serious buyers, you will need to be competitive. Buyers don't care if your house was not foreclosed or is not selling short. If a buyer is looking for the best 4 bedroom, 2 1/2 bath home with a basement in a given area, he is going to consider all of them in a price range. I have NEVER had a buyer tell me that he would look at foreclosures and shorts at $150,000 but would be willing to look at some owner occupied homes at $175,000. It's just common sense folks.
5. You need to see inside at least 100 homes before you decide to make an offer? OMG. Don't get me started. So are you going to be okay with all the wasted time when you get to #100 and #7 is gone and you loved it more than all the other 93? I've shown and sold 1 house to buyers in my career many times. See as many as it takes to find the one that you like, in an area you want to live, at a price that you can afford, in condition that is suitable to your level of tolerance. You can find an amazing home in your price range but if it has been really torn up and neglected for years, it may not be worth it to you.
6. If I make an offer any seller, including a HUD or a bank owned foreclosure, they should respond within 24 hours or less. Right, well, that's not going to happen. No matter how many times we warn people not to expect ANY part of this process to be timely or quick, they don't believe us. I recently worked with a couple who despite all the warnings insisted on making an offer on a foreclosure AFTER they told me more than once that they HAD TO close within 3 weeks. At first meeting I told them straight away that they needed to find an owner occupied property if there was any hope of coming close to their required closing date. No, they ignored me, what could I possibly know. We didn't even have a signed contract in 3 weeks. Was this one unusually painful? Yes it was, but better to expect the worse and be pleasantly surprised with the process and time that it takes to accomplish a closing than try to push an REO, bank or a Department of the United States government with idle threats of walking away. Trust me, they don't care if you walk. Seriously, they don't. There is no emotion here. They are not afraid that they won't sell this house. They are not afraid that they won't be able to make their next mortgage payment. You are dealing with a corporation for all intents and purposes - this is a business deal and emotion is far removed from the process. The only one who is likely to get very emotional is YOU if you try to manipulate the transaction into something that it will never be. Relax. . .this is the "upside" to buying a short sale or foreclosure. You get a great deal but there is another price to pay. . .your patience.
7. When I contact an agent about seeing a house they should agree to show me the property without insisting that I get prequalified or provide a prequalification letter. . .they should "trust" that I know what I am talking about when I tell them I can afford the house. When is the last time you bought a car? Nuff said. I mean really? Car salesmen don't even want to open the car door on the lot for you until they have your driver's license and run your credit. I recently bought a car myself and I was one of those "difficult" buyers. Actually, I was not intending to buy that day. I did my research online (like you would do when home shopping) and then I wanted to go out and take a closer look to narrow down the choices (sound familiar, i.e., real estate!). Shame on me. I should have thought about what I was asking. I saunter into the lot and just start dashing around looking, not really wanting to be bothered with the salesman. Once I focused on the car that I came to see, I wanted it to be opened. He was good. . .he gingerly guided me into the dealership for "a little" information about what I was looking for. Was it frustrating for a minute? Yes, it was, but I understood. This guy works on commission. He needs, not wants, NEEDS to know that the time he spends with me has at least a chance of developing into a paycheck. Otherwise, we are all just working for free right? Would you be okay if your boss said that next week you would work for free and if he decided he liked your work product he would pay you? Sounds kind of like a gamble doesn't it! Well, yes, it is, as a matter of fact. You cannot imagine in your wildest dreams how many people in my career that I have given of my time so that they could lie to me and finally admit something like, oh, for example, "I have a friend who wants to buy a house and I was just curious if this one might be something she would like." So, in your world you think it is okay to occupy someone's precious time when you are not even thinking of really making a purchase? In whose world is that right or fair?
For the general public, here's the bottom line. And, I believe that I can speak for many other real estate professionals in this business. If you would do me the courtesy of answering a few questions, perhaps even agree to meet with me, or speak with a trusted lender on the phone, just cooperate with a serious process, I will spend all the time that you need and then some. I will bend over backwards. I will drive you around FREE of charge. I will feed you FREE of charge. I will listen to your concerns on the phone at night FREE of charge. I will treat you like family. I will do whatever it is that YOU need to be comfortable with the process and your decisions during the process. But, if you treat me like I owe you something, just because you ran across my picture and phone number on the internet, when I have never met you and you have no intention of ever buying a house from me (like the ones who admit they already have another agent but she lives so far away they hate to ask her to drive over to see the house when they can just call ME to do it for FREE with no chance of ever getting a sale from it. . .yea, those are the ones that I have recently started laughing at), then no, you are not going to be taken seriously. You will have instantly labelled yourself a "looky looker" or "time waster". Telling me that you intend to pay cash just to stop the prequalification conversation doesn't work. That's GIANT red flag to real estate agents. Why? Because so many have been burned by people claiming to have cash when they didn't have a penny! Just relax, buying a home is not an emergency and should not be treated as one. If you find a house today and have to meet an agent today and see the house today and arrange financing today, all before the bank or HUD's deadline, do you think you might have buyer's remorse for not taking your time? Probably.
There's a process. You can handle this. Get what you want when YOU respect others and their time. We work on commission - the promise of a paycheck once the job is done. We do not work for free. Take me seriously and I will happily take you seriously. I do my best work for clients who treat me like a professional. I'll bet you feel the same way when you are at work.
Happy 2012! The real estate market is going to be great! Jump in early.
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