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Today's Home Buyers Are Getting Smarter

By Lisa Udy

Real Estate Agent with Platinum Real Estate Group

April 19, 2010 10:25 AM

Have you noticed the difference of today's home buyer compared to 5 years ago? Today's home buyers have changed and it's a great sign for the future. I can't talk about every market across the nation, but from what I have been seeing here, home buyers are getting smarter.

Crazy Home Buyer Man Remember back in the "hey days," when home buyers would buy a home and wouldn't think twice?

It went a little something like this:

"Can you show me that luxury home?" Said Mr. 2004 home buyer on a teachers salary.

"Sure I can show you that home, but I need to know if you can afford it." Said Mrs. 2004 real estate agent.

"Oh, it's not a problem, I have this loan where I can pay almost nothing for the first 5 years, and I know I will get a raise by then so it's all good." Said Mr 2004 home buyer on a teachers salary.

"Well, if that's how it's going to be, I would love to show you that home, do you have any money down?" Says Mrs. 2004 real estate agent.

"Money down? Na, I don't need money down. I have a loan that I only pay this fee to the lender, but it's all good, the fee is in the loan to. I don't need to worry about it though, because in five years I'll just sell the home and upgrade to a bigger mansion next to the lake. Home prices will always go up." Said Mr. 2004 home buyer on a 34k a year teachers salary.

"Yeah you're probably right, home prices will probably just go up, let's get you into that home!"Mrs. 2004 real estate agent.

This was an all to common scenario when buying a home was a "short term investment" rather then a home. Mr. home buyer would get a loan that he couldn't afford and Mrs. real estate agent would say let's get the deal done.

It was win - win.

Today's Home Buyer Is Getting Smarter...

I said home buyers are getting smarter these days. Does that mean home buyers back then were stupid? Not at all. Where they careless? Maybe. Were real estate agents part of the problem? Definitely. Can we blame the home buyer? Sure. Blame the banks? Seems a good fit. Blame the government? Of course, always blame the government.

So what makes today's home buyer smarter? Simple. Do you remember when you were a little kid and one day you thought you would try and stick a metal fork into the outlet to see where those little wholes went? What happened? You got zapped.

It's the same thing today with home buyers. No matter who's fault it was, the collapse of the real estate market was a wake up call to a lot of people. People got stung and many of them are still feeling the sting. It hurt, it hurts, and will continue to hurt until we wake up and take our forks out of the socket.

Smarter Home Buyer Home buyers on the fence? GOOD! Stay on the fence until you're sure you're ready.

Home buyers weighing risks? GREAT! Know the risks, calculate their effects on you long term, and make an educated decision.

Want more money down? EXCELLENT! I applaud you.

Not sure about job security? WAIT! Good for you.

Home buyers today are more reluctant, more calculating, and are becoming smarter. People got bit in this recession and they won'r forget for a very long time. People are thinking twice before putting their forks into those little holes and that is the only way we can move into the right direction in the future.

No matter what the government does to prop up the market or what REALTORS(R) say or how easy it is to get credit, home buyers are becoming smarter with their decisions.

So, Mr. and Mrs. 2010 home buyer, you make my job a little harder, you make your loan officers job a little harder, but you make our future brighter. Keep it up.

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Karen Fiddler, Broker/Owner

Karen Parsons-Fiddler, Broker 949-510-2395 - Mission Viejo, CA

Orange County & Lake Arrowhead, CA (949)510-2395

Clever post...and I appreciate your need to get those first-timers into escrow. Go get them.

Apr 20, 2010 07:45 AM

Lainie Ramsey

Homes By Lainie Real Estate Group - Pottsboro, TX

Lake Texoma Expert

You are sooooo right!! Even in Texas where we have not been hit as bad (in my opinion) as some other states - we as buyer's and Realtors have learned quite a lesson. My husband and I were some of the fortunate ones that were thankfully not ruined or unable to pay our bills during this recession, but with such close ties to so many people who were affected -- we too have been making less risky housing decisions now than what we would have in the past. We sold our house that was bordering being a bit to expensive for us -- yes, we had to pay money to get out of the home, but I figured better a small amount of money now than a HUGE amount of money down the line. When we purchased this house we put nothing down, took on more than we should -- so I figured having to pay a little at closing was only fair. On our next purchase we will be ultra-conservative. We will not purchase a home until we have 20% down - no matter what great deal comes along. Lots of life lessons we have learned in this economy. Thanks for the post!!

Apr 20, 2010 08:28 AM

Martin E. Kalisker, Esq.

Natick, MA

Real Estate Law From A Practical Perspective

History always repeats itself. Give the market another 4-5 years and you will have realtors that didn't learn their lesson the first time by selling more home than people could afford and coaching buyers who use more conservative lenders to "just use my guy - he'll underwrite anything"

Apr 20, 2010 08:50 AM

Cliff Kavanaugh

Keller Williams Realty of Charlottesville Virginia - Charlottesville, VA

ck@kw.com - 434-466-5128 - www.CvilleHomeSearch.com

I have had to get smarter as well!

Apr 20, 2010 08:55 AM

Ruthmarie Hicks

Keller Williams NY Realty - 120 Bloomingdale Road #101, White Plains NY 10605 - White Plains, NY

Yes and no....I agree with several posters who say that they THINK they are smarter. But being awash in information without any knowledge of how to disseminate it creates a buyer who can make a lot of mistakes and thinks he knows more than the agent. That can be a problem. They can tend to make expensive mistakes because they trust Zillow over their agent regarding pricing and other information. That they are more cautious is good - that they may be "over-informed" and "under-educated" can be dangerous for them. "A little bit of knowledge is a dangerous thing."

Apr 20, 2010 09:46 AM

Christopher Pataki

RE/MAX Associates - Hockessin, DE

Hockessin Delaware Real Estate

I agree that buyers are more knowledgable about the home buying process but also note that some of these buyers are dangerous. They get their knowledge from the real know-it-alls: their family, their bartenders, their office mates, the cabbies, anybody but their real estate professionals...................chris

Apr 20, 2010 11:09 AM

Timo Yannopoulos

Platinum Realty Licensed in Missouri - Kansas City, MO

Buying and Selling Kansas City Homes

Never underestimate you customers and/or your clients, some times some may know more that you do.

I have receive this advice from a German psychologist specialized in Sales and Marketing "He is a great gentleman"

Apr 20, 2010 01:48 PM

Jirius Isaac

Isaac Real Estate &TriStar Mortgage - Kenmore, WA

Real Estate & loans in Kenmore, WA

I totally agree with everything you said, but I do not thin k that makes buyers any smarter, just more cautious, which is good.

Apr 20, 2010 03:56 PM

Rich Cederberg

eXp Realty - Albuquerque, NM

eXp Realty Agent Albuquerque

Good post Lisa. I've noticed the change in buyers too and I agree it's for the positive. I can't tell you how many times this year I've heard this statement: "We're approved for more, but we want to stay with a payment we're really comfortable with." I think that's great and demonstrates that buyers are much smarter.

Apr 20, 2010 05:24 PM

Gary Pike

Better Homes and Gardens Real Estate Metro Brokers - Powder Springs, GA

Love your post but I don't think we will know if they are actually smarter until we get past our current problems. People have great forgetters, banks have clever ideas to come on financing, and Realtors will always want to make a buck. It's easy to know what to look for when your reminded of it daily; lets see what happens when the media starts announcing the crisis is over and it becomes a seller's market.

Apr 20, 2010 11:13 PM

Anonymous

Peter Diamant

I love your writing style. Very informative and entertaining at the same time. Quite obviously, not everything in the good old days was good. I believe more responsibility and accountability by the market participants, especially the buyers and us, the agents, will lead to a healthier less volatile market.

Apr 21, 2010 01:31 AM

#48

DeAnne Davidson

REMAX Professionals, Tacoma Washington - Lakewood, WA

GRI, CIAS, SRES - Washington State

Thanks for the post. I tend to agree the type of buyer has changed. They tend to plan better and be more thoughtful about what they are doing. Taking personal responsibility for their decisions. This type of market no longer attracts the careless. The pendulam has swiung wide.

Apr 21, 2010 03:21 AM

DeAnne Davidson

REMAX Professionals, Tacoma Washington - Lakewood, WA

GRI, CIAS, SRES - Washington State

Apr 21, 2010 03:21 AM

Gary Steuernagel ASSOC. BROKER, ABR, CRB

Keller Williams Southwest - Sugar Land, TX

They have more information available, but not necessarily more "knowledge". They therefore think they know more and will now make new mistakes. We as agents need to help them transform the info into knowledge and utilize strategies to help them avoid the new mistakes.

Apr 21, 2010 04:16 AM

Lisa Udy

Platinum Real Estate Group - Logan, UT

Logan Utah Realtor

Good morning everyone!

I can see a lot of people have said buyers "think" they know what they are talking about. I agree to a point, but it's our jobs to make sure we guide them down the right path. First time home buyers are mostly in the dark but they do seem to be more responsible with their payments. I want to thank you all for your comments, and the great discussion. :)

Apr 21, 2010 04:19 AM

Carol & Vince Ciroli

ConnectRealty.com - Columbus, OH

I ran into Mr. 2004 last week..I asked him how everything was going...he said things are really good, could not be much better. I asked him if he was able to refinance his home...he said "no", he said, I did something even better...I stopped paying on my mortgage about two years ago. He said when the bank raised his monthly payment to more than he could afford he stop paying. He said nothing much happened other than a bunch of letters, although he did get a notice of default about a year ago. He said he read about how to put off any foreclosure from some site on the Internet.

I next asked him if he was concerned about being put out on the street; again he said no. He said the Government has some great programs going and he does not have to worry about paying any taxes on any deficiency...so no worry from the IRS. He said it was actually better than that...he said he did a short sale and had the bank agree to show his account "AS AGREED", if he approved the deal. He said that was important for if he is able to keep all of his bills current over the next year or two he can get another loan.

But again I said you will be out on the street! He said are you kidding! He said the governement is going to help him one more time. I said how so?? Well he said I have lived in the house I just sold for over 5 years and he said he qualified for a $6,500 tax credit on a new home purchase. I said, I thought you could not get a loan for two years a best...how are you going to do this? He said he was going to do a land contract and apply the $6,500 as a downpayment to property.

He said he went with an investor and found a home within two blocks of his old home, it was similar to the home he was selling only at half of what he paid for his place in 2004...he told the investor he would give him a couple thousand, plus, when he got back the $6,500 tax credit, he would apply it to the land contract. The investor bought the place and he did a land contract with him and they will be moving in next week.

I asked him if he understood that the government gets their money from us tax payers...he said that was my problem. He said you have to be a smart buyer in this market.

Apr 21, 2010 05:35 AM

Carol & Vince Ciroli

ConnectRealty.com - Columbus, OH

I ran into Mr. 2004 last week..I asked him how everything was going...he said things are really good could not be much better. I asked him if he was able to refinance his home...he said "no", I did something even better...I stopped paying on my mortgage about two years ago. He said when the bank raised his monthly payment to more than he could afford he stop paying. He said nothing much happened other than a bunch of letter, although he did get a notice of default about a year ago. He said he read about how to put off any foreclosure from some sites on the Internet.

I next asked him if he was concerned about being put out on the street; again he said no. He said the Government has some great programs going and he does not have to worry about paying any taxes on any deficiency...so no worry from the IRS. He said it was actually better than that...he said he did a short sale and had the bank agree to show his account "AS AGREED", if he approved the deal. He said that was important, for if he is able to keep all of his bills current over the next year or two, he can get another loan.

But again I said you will be out on the street! He said are you kidding! He said the governement is going to help him one more time. I said how so?? Well, he said, I have lived in the house I just sold for over 5 years and that he qualified for a $6,500 tax credit on a new home purchase. I said, I thought you could not get a loan for two years...at best...how are you going to do this? He said he was going to do a land contract and apply the $6,500 as a downpayment to property.

He said he went with an investor and found a home within two blocks of his old home, it was similar to the home he was selling; only at half of what he paid for his place in 2004...he told the investor he would give him a couple thousand, plus when he got back the $6,500, apply it to the land contract. The investor bought the place, and did a land contract with him, and they will be moving in next week.

I asked him if he understood that the government get their money from us tax payers...he said that was my problem. He said "you have to be a smart buyer in this market".

Apr 21, 2010 05:42 AM

Jayne Williamson, REALTOR, Broker, GRI

Keller Williams Realty Mountain Partners, Hendersonville, NC - Hendersonville, NC

It is only a "Good Time To Buy" when it is a good time to buy for you. Many of the Buyer's today realize that and go to REALTORS (R) for education on the market. I have done a lot more educating in the last year or so than anything else.

Apr 22, 2010 02:34 AM

Christine McInerney

Great Life RE - Knoxville, TN

The McInerney Team, Knoxville TN Homes For Sale

I have found that sometimes information overload can be bad, if the Buyers do not know how to use the information. I have had a lot of buyers this past year get hung up on the tax appraisal value, which does not necessarily correlate with market value.

May 04, 2010 06:22 AM

DeeDee Riley

Lyon Real Estate - El Dorado Hills CA - El Dorado Hills, CA

Realtor - El Dorado Hills & the Surrounding Areas

Well said Lisa. In 2004, I was just Mrs.Wanna Be Agent still so missed all the excitement on that end but we did participate in the home buying group that year. We must have been the dream buyers though when I look back as my husband had been at Intel for 23 years and we had equity from our previous home to put down. Most of that equity is gone now but we love our home and are toughing it out. Thanks for your post as it is a great reminder when our buyers indecisiveness gets to us.

May 28, 2010 04:21 PM

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Lisa Udy

Logan Utah Realtor

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I am a full time real estate specialist in Logan Utah. I have almost 9 years of experience in the real estate business. If you need help selling or buying a home feel free to contact me. If you have any questions about the Cache County real estate area I would love to help. If you would like to just chat about the current market send me an email, and I would be glad to share my expertise in our local market. For those of you who are bored and wanna gime me some flack, give me your best shot! Subscribe to Logan Utah Real Estate by Email

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