Yeah! My first sequel! Here come my favorite "BUYING" Real Estate myths (thanks in advance to those of you who sent in ideas)!
MYTH 1* - "Sellers are desperate, I can write my own ticket."
Not true. Many Sellers would like to sell but don't have to sell or prefer not to sell if the price comes up well short of their expectations. While some Sellers really must sell due to lending pressures, death, divorce or job loss/transfer, many other Sellers have had fantastic results - even in this more challenging marketplace. Regardless of the circumstances, well-priced homes continue to find a willing and able market.
MYTH 2 - "I can take my time. That house isn't going anywhere."
Maybe, maybe not. If the house is overpriced, it probably isn't going to move quickly but many Buyers are taking advantage of historically low interest rates and entry-level opportunities. While you wait, someone else is very likely to capitalize on the chance to buy a home or buy into a neighborhood that was previously unaffordable to them. Go on, make an offer. You have little to lose.
Remember that homes, especially here in Piedmont, Rockridge and Berkeley, are unique commodities. Some of them have never been on the market before and others won't come back for decades. Some have no parallel; they are truly one-of-a-kind estates. If you LOVE the house and plan on living in it for the next 5-10 years, it doesn't make much sense to wait - even if you believe prices may continue to correct (they may - or they may not!).
We may bump along in the bottom for the next several years or home prices may turn around rapidly as demand continues to grow and stocks climb. Either way, we won't know until after the fact. Will you have missed your window of opportunity?
MYTH 3 - "Interest rates will stay low."
This one is absolutely false! Interest rates are currently artificially low (courtesy of the federal government) to encourage a faster recovery (and it's working - sales are up)! If you wait for a property to reduce in price, but the interest rate jumps up just .05% during that time frame, you are very likely to experience a net loss!
MYTH 4 - "Everybody's in my shoes. I'll write a "contingent offer" when I find a home I like and then sell my home after I am in contract."
Okay, but you will be in competition with those that have already sold their homes. Many people are selling their current residence first so that they have a clear idea of what they can afford on the "buy" side. Those that choose to identify their next home before selling, have a much tougher hill to climb. Conversely, those that have sold or are in contract on their current residence are clear for takeoff!
The "contingent purchase" continues to be the weakest offer on the table and generally, last in line (although admittedly, a more frequent part of the landscape). If you employ this strategy, make sure your current home is ready to place on the market immediately and price it aggressively. Sellers who agree to "contingent offers" will have limited patience and expect to see quick results!
Myth 5 - I'll buy a foreclosure and get a cheap deal."
There are a couple of problems with this line of thinking. First, foreclosures (or REOs as they are known in real-estate lingo) are few and far between here in Piedmont, Montclair, Rockridge and Berkeley. (Now if you want to move to Stockton, Antioch or Modesto, you'll have plenty of inventory from which to choose).
Neighborhoods in Oakland where foreclosures are more prevalent, greatly reduce the value of the surrounding homes and bring neighborhood values down as a whole. These communities will have a slower recovery and may not be where you ultimately want to hang your hat. (However, there may be great investment opportunities in some of these neighborhoods if you have cash resources.)
Second, Buyers in the foreclosure market are generally heavy hitters. These ALL-CASH buyers can be stiff competition! Don't get discouraged just yet - these professional investors tend to offer wholesale value, so if you find a REO that meets your needs (it could happen if you are exceedingly vigilant and very, very lucky!) you will likely outbid the professional investor. Make sure you have a dependable loan and a decent down payment on your side to offset the all-cash offer he is likely to present.
Myth 6 - "What do I have to lose by bidding low? The Seller can counter the offer."
Warning Will Robinson! You stand to lose the house! Holding back is a reasonable strategy IF your offer is countered, but don't count on it. I worked with a Seller recently who received three offers on his home and took the highest one on the spot. When the Buyer in second position found out, she was devastated and phoned to say, "I could have (and would have) gone higher, if I'd known. I assumed the Seller would counter."
You know what they say about assumptions . . . Assume nothing when it comes to the house you desire and always put your best foot forward - especially in a multiple-offer scenario. It is very likely you won't get a second chance to improve your offer.
Myth 7 - "I'm looking for the perfect house!" (This one was sent to me by my good friend Jan, and it will always be my favorite.)
Listen up! Perfection doesn't exist - in a home, in a mate, in life. If "perfection" were the standard we lived our lives by, none of us would ever get into a bathing suit, let alone purchase a home!
Find a home that meets the majority of your needs and be prepared to compromise on the rest. Decide what's "non-negotiable" (for some of you that's location, for others, it's a back yard). The point is that some items on your "wish list" are less important than others. Clients I recently worked with were certain they wanted a house in the Wildwood School District until they found a wonderful home in the center of town (and no, it wasn't "perfect").
Be open to possibilities and be prepared to adjust. (This is true for ALL price points!)
Besides, perfection is boring - just ask my husband - whom I'm sure would never have asked me to marry him if perfection had topped his list! Sometimes it's the imperfections that we really grow to love (at least I hope so).
That being said, how can I help you?
Julie Gardner, has been writing The Perspective for 18 years and has published more than 670 essays on life and real estate.