Maybe Some Folks Really SHOULDN'T Buy A Home!

By
Real Estate Agent with L.A. Property Solutions BE# 01342428

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

Your first Los Angeles home may not be your dream houseWe'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!

Some buyers cannot even afford a shack in Los AngelesI 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?

Grow your bank account before looking to buy Los Angeles Real EstateSo, 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 LakeEcho ParkLos Feliz, and surrounding areas, contact me directly at 213-215-4758 or check out LApropertySolutions.com

Jenny Durling signature

Jenny Durling
Broker Associate
L.A. Property Solutions
213-215-4758
info@LApropertySolutions.com
LApropertySolutions.com

 

Copyright © 2011 By Jenny Durling *Maybe Some Folks Really SHOULDN'T Buy A Home!* 

 

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Rainmaker
147,437
Krista Lombardi
Prudential Calfornia Realty - San Diego, CA

Hello Jenny,

 I do understand this problem, I wish I had some advice for you. I've seen the same type of client and its difficult.

Oct 10, 2011 07:25 AM #1
Rainmaker
1,107,644
Margaret Goss
Baird & Warner Real Estate - Winnetka, IL
Chicago's North Shore & Winnetka Real Estate

If they can only get approved for a certain amount, and their dream home in that price range in their desired location doesn't exist - then what are they not understanding?  Some people are hopeful and some are just plain _______.   I admire your desire to help them, but aren't you just wasting time?  Maybe they can rent for a while and buy in a few years would be my best advice.

Oct 10, 2011 07:35 AM #2
Rainmaker
242,126
Jenny Durling
L.A. Property Solutions - Los Angeles, CA
For Los Angeles real estate help 213-215-4758

Krista- I think we all have some of these- I'm hoping to get some advice on how others are handling them

Margaret- It seems weird to me as well that they can't see what is right in front of their faces. There is nothing they can buy in their price range- end of story.  Yes- I think they should go rent and save money, but would it not be prudent to find a way to keep in these peoples' good graces for the sake of referrals and hopefully future business with them?   I don't feel like I'm wasting time because I'm not taking them to see anything. They have listing book accounts and can see what is/isn't available. Do you think I should tell them to come back in a year or so? There's got to be a way to keep them as potential clients in the future without offending them right now.

 

Oct 10, 2011 08:10 AM #3
Anonymous
MichaelKFreeman

Just qualifing for the loan is not enough they also need to be able to afford the up keep & maintence, and heaven forbid they have to pay for a emergency that wasn't in their budget, also with the unstable ecomonmic conditions sometimes it's hard to just afford the normal expenses of support of a family having to decide wither to but food or gas is a serious problem if your barely getting by.

Feb 25, 2012 09:13 AM #5
Rainmaker
242,126
Jenny Durling
L.A. Property Solutions - Los Angeles, CA
For Los Angeles real estate help 213-215-4758

Michael- that is also true!  The hope is that with conversative lending now, banks will not loan more than a person can afford and that includes having money to pay living expenses and having cash reserves. I do think there is simply a general sense that it's a buyer's market everywhere and if 1 property sold in their price range in the last year, there have got to be others.  It's not logical thinking but I don't want to offend them. I simply tell them the truth and if they don't believe me, they will find out for themselves soon enough. I would just like them to come back to me when the ARE in an financial position to afford a home.

 

Feb 25, 2012 09:24 AM #6
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Rainmaker
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Jenny Durling

For Los Angeles real estate help 213-215-4758
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