Please help me out with this. There is so much real estate information online these days, I get 'leads' from all over the place but am finding that some of these folks really shouldn't buy a home! I'm not talking about the people who plan to move again in a year, or people whose jobs are uncertain. I'm talking about buyers who simply cannot afford a home.
There are loans out there for everyone and with the 3.5% minimum down payment for FHA loans, there are plenty of people who can qualify. What I seem to be getting alot of these days are potential buyers who qualify for such a small loan and have so little for the down payment and closing costs that they are basically impossible to find homes for.
There is Unrealistic, and then there is Impossible
We've all had clients who are looking for more than they can afford. Normally these buyers come to realize that their first home will not be their dream home and they will have to make some concessions. That 3,000sf home with the pool will have to wait until they are able to trade up somewhere down the line. The issue I'm having lately is the number of leads that come through that don't realize they do not have enough buying power to buy anywhere even close to the vicinity they are interested in.
Los Angeles is huge and like anywhere else, there are a variety of different neighborhoods with houses and condos of all different sizes, conditions and associated price tags. My problem, if you will, is the buyers that simply cannot afford anything within an hour drive of where they want to live. We know they are looking at real estate online, as that's how they found us. How is it that they do not realize that in their current financial situation they simply cannot afford to buy a home- period?
You can't get a Shack for that!
I have a couple of potential clients like this right now. They are nice, sweet folks and I would love to help them. Unfortunately I simply cannot conjure up buying opportunities that do not exist. One couple is looking for a 2-3 unit property for $250,000 or less in an area where they'd be lucky to find a run-down single family home for $100,000 more than they can afford. I've tried directing then to other neighborhoods where there is a miniscule possibility of finding SOMETHING they could buy, but they will not budge from their position. Another young couple is just starting to look for homes but their price point is so low that I couldn't even find them a condo- assuming there are any FHA elgible buildings anywhere near the vicinity they are looking.
I continue to explain to all of my clients that they cannot necessarily 'believe' the list price. I tell them that some properties are priced low in order to either start a buying frenzy or to get ANY offer on a short sale in hopes of forestalling a foreclosure. In all likelihood these properties will never sell for as little as they are initially listed. The true offer price needs to be determined by looking at recent sold comparables and I am more than happy to do the research for them. They get upset that prices sell for more than the list price, and sometimes even think they should be able to offer less than list, regardless of what my research turns up.
What do you tell your clients?
So, what do you tell a person whose buying power is more than $50,000 lower than the cheapest shack you've seen on the market in years? Do you flat out tell them that unless they have a rich relative, they need to continue to rent (for as little as possible) and get to the business of saving up some money? I don't want to be mean and this has nothing to do with "I only sell homes to people who can afford 'X' ". I will help anyone I possibly can! These would-be buyers simply cannot afford to buy property anywhere in the county that would make sense for them based on their needs, lifestyle and the amount of distance they would have to commute to there jobs. If someone wants to buy a car, they see the prices and can easily determine if a car is in their future or not. Yet somehow, many buyers believe that a property they can aford will magically appear and they will soon become happy home owners, regardless of the evidence that this is not the case.
I don't want to simply turn these people away. It's likely that at some point in the future the will be able to afford to buy something and when they reach it, it would be my pleasure to help them buy it. I'm simply having trouble determining the best way to deal with this situation and would love your suggestions! For more information on buying or selling property in For information on buying or selling property in Silver Lake, Echo Park, Los Feliz, and surrounding areas, contact me directly at 213-215-4758 or check out LApropertySolutions.com
Copyright © 2011 By Jenny Durling *Maybe Some Folks Really SHOULDN'T Buy A Home!*