Tips for Deciding Whether to Buy a House Now

 With all the activity around the country in residential sales, many buyers and potential buyers are wondering whether it's time to sit out the rush to ownership.  Even without the emotional turmoil caused by frantic bidding followed by disappointment, they are nervous about the economics of buying.  Here are some tips to consider:

1--Most importantly, what you pay every month is the key factor in deciding what you can afford.  Although home prices have risen rapidly in many price ranges, interest rates are still low.  Once you know the monthly payment associated with a given purchase, you can compare that to your total earnings.  Interest, over the life of a mortgage, makes more difference than a few thousand dollars in cost, so keep that in mind;

2--Buying at higher prices is not as risky if you plan to stay for awhile.  Americans in general are staying in their homes longer than they used to do, and most price rises even out over time.  Just as you are unlikely to buy at the very bottom of a market, you are statistically unlikely to be purchasing at the very top;

3--With that in mind, consider the likelihood of having to sell quickly for some reason.  If you are prone to be transferred often, are looking to change jobs, careers, or location, you might decide to wait.  Real estate, although it is a great investment, is illiquid, meaning that you can't just take your money out whenever you need it.  If there's a high probability that you might have to do that, you should probably wait;

4---Next think about whether you might decide to move again within the area.  If so, that's less risky, because it's fine to buy high if you are also selling high.  If all the homes go up in a region, and you are planning to remain, you will just conduct that next sell/buy at a higher price point.  You will have more equity, and you will pay more for the next property, in an inflationary scenario;

5--Inflation figures into the equation in another way.  If you have basic living expenses that will be disproportionately affected by inflation, and you do not expect your income to match the rise, then you should be more conservative.  For instance, your grocery bill and your income will likely rise or fall together, and eating out is not a requirement, so doesn't have to stay constant. Suppose, however, that you drive for a living, and gas prices take a big chunk of your monthly income--that might be a reason to worry more about inflation.  It all depends upon whether you are more or less impacted by generally higher prices;

6--We are heading into the fall bumper season for real estate. If you've been shut out in the spring market, more houses will be coming on the market right after Labor Day.  Sellers are at their most flexible in the late fall (actually, between Halloween and Thanksgiving), so you just might get a better deal soon.  That should give you hope that you can be in your new home for the new year!  Whatever you decide, we are here to help you.

Keep Your Expectations Low

Remember the old phrase that "it's not over til the fat lady sings"?  Real estate transactions are like that often.  Things happen, and they happen right up until the papers are signed.  We have heard -almost- everything, but new stories keep popping up.  There are issues of sellers getting cold feet, buyers getting sick, or having children who get sick, sudden job losses, sudden divorces or separations or reconciliations, financial issues arising, and nearly anything else that you could imagine.

That's why a calm attitude and a good sense of humor both go a long way toward making the experience better for everyone.  Often it's the person who insists upon locking down the dates, who in the end can't meet them.  Or the seller who won't let the buyers postpone the closing, and then is the one who can't get out in time.  Given all of this, and more, I recommend that all parties expect at least one thing to go wrong (or maybe two or three things), so that they aren't thrown by a sudden change.  I would say that it's less the exception than the rule that something in your new home will stop working, or start leaking, right after the closing.  If you take that in stride, you'll be a lot happier.  Try to make it into a good story, that will get everyone laughing at a future dinner party or family reunion, and see whether anyone else can top your entry into a contest.  In our family, although it's not a real estate tale of woe, we can recount the day that one car caught on fire, one child got hit in a different car, by someone turning illegally, while the other child broke her arm, and the dog ran away.  You can't help but laugh when you tell it!

So, if you are ever annoyed because your real estate agent is not outraged by a request, a change, or a problem, now you know why.  We have memories of worse!

The Real Estate Market is Hotter than the Weather

Most people think that this time of year is slow for real estate, and that bad weather slows down the market even more.  While that used to be somewhat true, we now can tell-in real time, using Google analytics-that buyers are out in force during the winter months.  In addition, despite the cold, they want to get a jump on the spring market, so they are turning out in force for open houses and appointments to see new listings.

Just as in every other year, in our academic area, we don't  have enough inventory to show the number of buyers coming through.  Also, we are catching the end of the wave that has swept the country from west to east in the past few years, and inventory shortages are driving sales. While other regions have seen a slowdown, we seem to be experiencing a boom, or at least a boomlet.  Sometimes it's good to lag the market!

If you are a seller, this is your moment, and you should seize it.  If you are a buyer, don't be shy about bidding, and bidding on what you may feel is the high end of value.  While the spring market may bring more choices, it will also bring more buyers, so your chances of landing a bargain will not go up.  And think of this--if you are successful in your offer, you can be enjoying your new home by spring, instead of spending your weekends at open houses!

Season's Greetings



Here We Are Again at the Sweet Spot for Buying

Every year, I write the same thing at Halloween:  The period between now and Thanksgiving is the best time to buy a house!  People who want to sell before the end of the year for tax reasons, people who have already moved (or are about to move), people who are trying to avoid the increased maintenance and expense that winter brings, and others who may just want to check a sale off their to do list, are all itching to sell before the true cold weather sets in and the calendar turns to another year.

Buyers who have been waiting should gear up when they read this, because it can often be easier to reach agreement when the clock is ticking, even if it's only a psychological clock.  In addition, rates tend to drop around this time (though we may not see that this year, even a pause would help) and go up in the spring season, so there's another reason to buy now.

Even something as mundane as the inspection can be simpler in the time of  year when the heat is on and the hot water is flowing often.  And, since many workers look to earn extra money during the holidays, it may even result in a faster repair or maintenance appointment.  Mortgage brokers as well want to close before the end of December, as results are usually compared by quarter, and bonuses accrued for that period as well.

So what are you waiting for?  Ready, set, BUY.

The First Two Weeks

There seems to be a persistent practice in real estate of "testing the market" with a price higher than what the agent believes that the property will bring at closing.  Sometimes there is an agreement that the price will be lowered after some stated period, often thirty days.  Agents often feel that sellers become wedded, however, to the original listing price, and forget completely that they were told that a lower price would be more in line with market expectations.

While testing the market might seem like a reasonable course of action, especially if there is a clear understanding up front that the price will be lowered in x days if not enough action, or an offer, is generated, those of us in the industry should know better. We now have access to all kinds of information that tells us who looks at a listing, when they search, and how (with what device).  We know popular hours, phrasing that captures attention, and click-through rates by property.  We can see whether they looked at it, saved it, forwarded it, or contacted us about it.  Administrators like me get a copy of every email inquiry sent to an agent on certain search engines and platforms.

And what do we know from all of that?  We know the power of the new.  Overwhelmingly, the greatest interest in a property comes in the first two weeks after it gets listed, whether it is commercial or residential, and no matter the price or location.  Some properties clearly generate more activity than others, but always get the most attention early.  Sometimes that is because prospective buyers have signed up for notification alerts, so that a new listing will show up in their emails.  Many times it is because the buyers themselves look on a regular basis, and click on anything that they haven't seen before.  The end result is the same:  They gravitate toward the newest entries.

So it's easy to see the problem with testing the market.  Your property gets the most exposure and the greatest number of views at the original price, which is higher than the agent, and perhaps even the seller, thinks is the true selling price.  Agents often talk about how much higher the likelihood is of securing a buyer in the first two weeks after the listing comes onto the market, but, in order to secure the listing, they also often sabotage that chance, by using the most useful marketing time to expose the property at the wrong price.

We know that buyers today know a lot, and often as much as agents or sellers, about the value of properties, through comparisons of available inventory, and market knowledge gained online and elsewhere.  They aren't going to overpay, and many aren't going to potentially waste their time making offers that will be refused.  They concentrate instead on properties that are listed at compelling prices, which suggest that they will sell quickly.  That motivates buyers to make speedy offers, at prices near, at, or above the listing price, especially if they see that there is a lot of activity at open houses, or with showings.  It's better to accept the reality that buyers know value, than to think that serving up higher-priced listings will change their minds about the correct price.

If there is one takeaway from this, it should be that sellers need to ask agents this question:  What price do you believe that my property will close for in the end?  Then list as close to that number as possible.  And enjoy the attention your property will receive.

Use the "Off" Season

Every summer, the real estate market slows down for a period of time, but it's a different few weeks every year.  Some years, the lull is after commencements, sometimes it hits with the Fourth of July, and, if not, there's usually a slowdown in August.  If you are a buyer, and willing to search for property in the heat of summer, you can do well.

Many listings sell in the spring and close in June or July.  What's left may not even get shown very often, since vacation schedules and outdoor plans stop people from looking , and even thinking, about real estate.  That doesn't change a seller's desire to sell, however, and he/she may be more flexible as a result.  Even though there is almost always an autumn pick-up in the market, that can start after Labor Day, or after Election Day, so sellers get impatient waiting.

That's where a smart buyer comes in.  Be prepared to be accommodating on a closing date, especially with a summer-oriented property. Be ready to have vacancies, if you are looking at investment properties with school-year leases. New choices are still appearing on the hot sheets and the internet.   When the spring is late in coming, and this season it certainly was, there are often delays in getting things onto the market, and so good houses and buildings can still be available well into the dog days of summer.  In either case, they are still for sale now.

Take a beach day, and convert it into a real estate tour instead.  You will be glad that you did when fall rolls around, and you have closed already!