Special offer

3 Mistakes New Buyers are making in today's Real Estate Market

By
Real Estate Broker/Owner with Zion Realty

Purchasing a home for the very first time can be a joyous yet stressful event. Whether you've been a long time renter, or are a young millennial ready to spread your wings and fly out on your own, buying a home is a much more complicated process than searching properties on the Internet. Today's current home buying market in many ways is much the same as it's always been but in other ways it's vastly different than it was before the past economic recession.

Mortgage lending guidelines are tighter and more restrictive. Banks and lending institutions can require jumping through and around many more hoops and obstacles for you to attain pre-approval for a loan. New laws are being enacted that will extend the amount of time it takes to purchase a home once you are under contract with a seller. In some areas around the Country they are seeing such a low inventory of homes available for sale bidding wars are becoming normal once again. 

Hiring the right real estate agent to represent you is essential now more than ever before. We keep educated, trained, and up-to-date on all of the laws and contractual requirements pertaining to the purchase of a home. Myself being a real estate agent and now Broker for almost two decades I see a few adverse trends forming among new and first time home buyers that are keeping them from finding and closing on the right home. 

 

1. Don't spend all of your savings on your down payment

The old way of thinking was to put as much money down on your home as possible. In principle, the thought behind this was to give you the most affordable monthly payment. Also, if you put 20% or more money down on your home you could avoid the required mortgage insurance. But what happens when tragedy strikes and all of your money is tied up in to your home? What if you or your spouse lose your job? What if the housing market dips and starts to eat away at all your hard earned savings that you dumped in to your property? Once you put that money down you no longer have easy access to it for when that rainy day hits.

Don't let someone convince you the more money you put down on your home the better. That's simply not the case anymore. You may be able to easily qualify for a loan with the amount of money you already have saved! Find a lender who will give you options. Let them educate you on all the different scenarios available to you and pick a loan program that has a good balance of money down requirement but still allows you to keep some of your savings in your pocket. 

 

2. Nobody has time for low-ball offers anymore

Do you want to know the quickest way to lose the home of your dreams? Submit a low-ball offer to the seller. Not only will it be roundly rejected but you might not even get the courtesy of a response. Long gone are the days of sellers being trapped in their homes by payments they can't afford desperately searching for a buyer to rescue them. The latest monthly data report for Arizona shows that sellers are getting almost 97% of the asking price for their home.  That means for a home listed for sale at $200,000 a seller will most likely get $194,000 or more for that home.

Generally, most new and first time home buyers also require the seller to assist them with their loan and closing costs. This assistance requirement will cause a seller to make other offers they've received a higher priority over yours if your initial offer is too low. If you find a house that you want then go get it. Don't waste precious time at the bargaining table which could allow another buyer the opportunity to get their offer in that may be higher than yours. Let your agent show you the most recently sold homes in the area to formulate an appropriate, realistic, and strong offer price.

 

3. There is no such thing as the perfect house

We've all seen the tear jerking moments on reality TV shows when a home buyer walks in to the home of their dreams that has everything they've ever wanted in a home. Well, I hate to be the one to burst your bubble but that's not reality. The perfect home does not exist. It ranks right up there with Unicorns and Big Foot. Every home will have pluses and minuses. New and first time home buyers always have their list of "must-haves" in a home. Some of the items on that list could very well be attainable but you will quickly find out that your list of "must-haves" is more a list of dreams and wishes you'll never see come true. You'll either be able to find a home in your desired location but it will need some renovating. Or perhaps you found a nicely upgraded house but it doesn't have that extra home office space you wanted. Maybe you found a move-in ready home within walking distance to work, but it sits right across the street from the local elementary school.

You get my point. You will need to make compromises. If you waste time searching for your perfect home other houses that would have still been a good fit will be snatched up by other buyers while you're on the sidelines. Meanwhile, interest rates will be rising and so will property values. A perfectly good home that could have been in your price range will soon be out of reach if your home search takes too long. 

 

Buying a home for the very first time takes knowledge, strategy, and patience. Very rarely will you find a home that works for you right away. As your agent, I will show you multiple properties, in multiple locations that will work for you. I'll educate you on the amenities of each neighborhood, as well as the surrounding areas so that you can weigh out the positives and negatives of each home. Most importantly I will be your best advocate when it comes to getting you in to a great home for the right price. If you are in the market to purchase or sell a home in Gilbert, Arizona or the East Valley, contact us at ZionRealtyAZ.com today!

Comments (77)

Tammy Adams ~ Realtor / Podcaster
Maricopa Real Estate Co - Maricopa, AZ
A Maricopa Agent who Works, Lives & Loves Maricopa

Fantastic points. In addition to the money reserves they just need to prepare themselves for the unexpected surprises that can creep up. ACs and water heaters quickly come to mind. Even with a home warranty you have to be prepared. 

Jul 02, 2015 08:59 AM
Michael Hinchliffe
The Bean Group - Georgetown, MA

I think low ball offers absolutely have a time and a place, but they need to be well justified.  I can't by your $200k home for $150k just because I want to.  You need to provide a detailed list for the buyer to understand where you're coming from.  In my experience, when the seller's agent knows they're overpriced, a legitimage lowball offer helps to educate the seller as to why their house isn't worth what they think - and the other agent will often be on your team!

Jul 02, 2015 10:54 AM
Geoff Grist
Mosman Neutral Bay Realty, Sydney Australia - Sydney, AU
Author of Sold Above Market book

THere is no such thing as the perfect house, so true, I tell buyers that if the house is 70% right then it's not 30% wrong and besides once you buy it you can make it your own so let's get started!

Jul 02, 2015 11:04 AM
John Rakoci
Eagle Realty - North Myrtle Beach, SC
North Myrtle Beach Coastal Carolinas

Many get in trouble as the PMI involved eats into the payment. It stays until the home is refied or paid off, no more 20% equity and it goes away. Always try USDA, VA, etc that is available for those considering a mortgage with PMI.

Jul 02, 2015 11:32 AM
Myrl Jeffcoat
Sacramento, CA
Greater Sacramento Realtor - Retired

Those are really wise words which are bound to help new buyers in the purchase of their homes, Nicole!

Jul 02, 2015 12:31 PM
Nicole Doty - Gilbert Real Estate Expert
Zion Realty - Gilbert, AZ
Broker/Owner of Zion Realty ZionRealtyAZ.com

Tammy - Plus you know once you get in to the home you're going to want to do some changes to it whether that be some new appliances or maybe new carpet or something. You'll want that extra cash in your pocket.

Michael - If there are plenty of comps that support a very low offer then I don't think that's a low-ball offer, it's just a value offer and one the seller is going to have to deal with sooner or later.

Geoff - Yes, let's get started!

John - There are at least a few options that buyers will have to discuss with their lender to see what's right for them not just now but for the future. 

Myrl - Thanks so much Myrl. It means a lot coming from an expert like you!

Jul 02, 2015 12:52 PM
Dorte Engel
RE/MAX Leading Edge - Bowie, MD
ABC - Annapolis, Bowie, Crofton & rest of Maryland

Dear Nicole,

Good road map for first time home buyers, who seem to be coming out of their parents' basements in droves these days.

Jul 02, 2015 02:44 PM
Kimo Jarrett
Cyber Properties - Huntington Beach, CA
Pro Lifestyle Solutions

Good advice for smart buyers, unfortunately, many are not because they don't heed the advice of their Realtor. Great post.

Jul 02, 2015 04:52 PM
DAVID SEGREST
BHHS Carolina Sun Real Estate - Charleston, SC

That was a very good post! As we try to educate our buyers and sellers. We have obstacles. The Internet and real estate reality shows make it hard for clients to adhere to our professional advise. We give them the guidance. It is up to them to use it properly.

Jul 02, 2015 09:59 PM
Chris Lima
Turtle Reef Realty - Port St Lucie, FL
Local or Global-Allow me to open doors for you.

Great post and if you don't mind I would enjoy sharing this with the buyers that are looking for perfection at far below market value prices.

Jul 02, 2015 10:23 PM
Lyn Sims
Schaumburg, IL
Real Estate Broker Retired

Great point & so true about the low ball offer. Just had some buyers that fortunately learned their lesson fast & changed their strategy. We are closing soon.

Jul 02, 2015 11:34 PM
Nicole Doty - Gilbert Real Estate Expert
Zion Realty - Gilbert, AZ
Broker/Owner of Zion Realty ZionRealtyAZ.com

Dörte - Yes they are and that's a great thing!

Kimo - Yes I know. I have one buyer in particular right now who is not listening to my advice and is losing out on home after home.

David - The on-line home search seems so easy to the general public but in reality it's so much more and they need to heed the advice of their real estate professional.

Chris - Absolutely! I would be honored if you shared the link with them!

Lyn - I have a buyer that isn't learning that lesson and it's frustrating for both of us.

Jul 03, 2015 02:07 AM
Sybil Campbell
Fernandina Beach, FL
Referral Agent Amelia Island Florida

Nicole Doty - Gilbert Real Estate Expert,  Thanks for the great blog.  Many first time buyers do not have the right person to explain these things to them.

Jul 03, 2015 02:17 AM
Sybil Campbell
Fernandina Beach, FL
Referral Agent Amelia Island Florida

Nicole Doty - Gilbert Real Estate Expert , one more thing I would tell a first time buyer is that a house is a 'work in progress", just like you said there is not perfect house.

Jul 03, 2015 02:19 AM
Nicole Doty - Gilbert Real Estate Expert
Zion Realty - Gilbert, AZ
Broker/Owner of Zion Realty ZionRealtyAZ.com

Sybil - Half the fun of homeownership is doing projects that improve your property and put a personal touch to your house. 

Jul 03, 2015 07:51 AM
Sandy Padula & Norm Padula, JD, GRI
HomeSmart Realty West & Florida Realty Investments - , CA
Presence, Persistence & Perseverance

Nicole Doty - Gilbert Real Estate Expert Great post and so true about #3. When I sold new homes for one of the largest natinal builders when I was dumb, new buyers always wanted something changed in the already completed home.

Jul 03, 2015 08:42 PM
Sheila Anderson
Referral Group Incorporated - East Brunswick, NJ
The Real Estate Whisperer Who Listens 732-715-1133

Good morning Nicole. This is a terrific post: a primer really and beautifully written too.

Jul 03, 2015 09:13 PM
Debra Peters
Referral Realty - Manorville, NY
NY Real Estate Salesperson

Fantastic post!!! Very informative and detailed.

Jul 04, 2015 03:50 AM
Mary Hutchison, SRES, ABR
Better Homes and Gardens Real Estate-Kansas City Homes - Kansas City, MO
Experienced Agent in Kansas City Metro area

"there is no such thing as a perfect house' --very true!  I recently had a buyer say she was going to 'find another agent' b/c, after working with her for 6 months, she didn't find anything. She admittedly has 'champagne tastes on a beer budget' , lives 90 minutes away, and wants to live in one of the hottest areas where the best houses get multiple offers the first day...yet doesn't want to pay list price.  There was always something wrong with each house--even if it was something that was easily changed.  Moving on!

Jul 04, 2015 09:04 AM
Rosemarie Heindel
Harry Norman Realtors - Big Canoe, GA
Rosemarie Heindel

Right on Nicole.  The one I see more often is low ball offers.  This is still happening here and I hope this comes to an end soon!

Jul 06, 2015 04:18 AM