The Tale of Two Buyers - One with a House, One Without
I saw this post by Susan Haughton and thought - "Everyone should see this."
It reminds me of an early experience I had at work where a manager told me about the benefits of saving to a 401K earlier rather than later. She had an excellent graphic and I took her advice. I hope the readers of this post by Susan, see the wisdom she is bestowing upon them. My question is, "Do you want the fairy tale ending? Or the fairly common one?
After college, Buyer A, let's call her Anna, lived with roommates to save money, put money in the bank whenever she could and was very careful with her choices.
She knew buying a home of her own was high on her priority list, because she felt it was the way to create wealth as well as give her stability and of course, a home to call her own, where she wasn't subject to the whims of a landlord.
A few years out of college, Anna now had her carefully saved down payment and closing costs, so armed with her funds and her excellent credit, she reached out to a real estate agent and started the process of buying a home.
Like all first time buyers, she had some stars in her eyes, but it did not take her long to realize she would have to choose between location and a "dream" home.
She very wisely chose location. And instead of buying the nicest home on the block of a less convenient and less desirable location, she chose one of the smaller homes in a highly desirable neighborhood, located in a sought after location, despite the dated kitchen and worn carpet. Because she realized the cosmetics could be a future project she could handle and even without granite countertops and stainless steel appliances, she could still prepare delicious meals and entertain.
Within 2 weeks, she was under contract and on her way to being a homeowner. Her agent was able to negotiate a new stove and dishwasher, so even though they were not stainless, they were new and work just fine, so she's thrilled with her new place.
Buyer B wasn't so lucky. Let's call her Brandy. In fact, Brandy is now on her third round of looking for a place, 5 years after starting her search. $120,000 later - the total of the rent she has paid over the past 5 years - she had the same down payment funds available she has 5 years earlier, not really having saved any additional money.
And she is still unhappy with the available inventory. Prices have edged up a good bit since the last time she looked, so she feels as if she is falling behind, especially since her rent is going up $400 a month in two months.
Even though Brandy just came back into the market a week ago, already the signs this will not be a successful search are starting to show, despite her initial excitement and promise to buy.
Unfortunately, in her price point and in her desired location, houses are not inexpensive. Something will have to give, either location or an updated home.
Brandy, though, is convinced if she looks long enough, the perfect house will pop up, despite all evidence to the contrary. She just shudders at the thought of living in a home that hasn't been updated.
Meanwhile, Anna is calculating how much of a tax refund she'll get in the spring, thanks to the tax deduction for the mortgage interest she has paid this year. It may just be enough to get that older carpet replaced. And what fun she will have updating her home, in her style and to her taste.
Life is full of choices. So is house hunting.
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