
Today’s Show : Homebuyer concerns…there are many…153
#homebuyer #realestateagent #concern
Deerwood Realty and Friends Podcast
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Wanted to go over some homebuyer concerns with you and what strategies we use to (hopefully) lessen the concern
Thoughts:
1. Rising mortgage rates The concern here is that the mortgage rates will go up before homebuyers will find a home causing them not to be able to afford a home with as many features as they would have hoped. There are basically two ways to help with this concern
A. Always be looking to add to your savings for a down payment on a home. If you have reason to believe that rates are going to go up and you aren’t having any success in the housing market, the option to save cash makes a lot of sense because you are going to be ultimately lowering the financed amount. So, even as rates rise, you still have a chance to buy that home you are looking for…as a bonus, as rates go up, home prices should go down…but that’s not likely to happen overnight
B. The second thing you can do is buy now. Look for that house that needs work..the one that is dated but has the “strong bones” that everyone is so fond of talking about. Preferably this purchase should be at the low end of your budget so that with time, and some sweat equity you should be able to move from that house comfortably should you decide to do so in the future.
In this market, I’ve seen people try to play the rate game, and while it works on the buy side, if you have to sell, you can get into a position where you are selling something better than you are buying for the same price…which makes no sense.
2. Taxes New homebuyers are rightly concerned about taxes. In this case, real estate taxes. I don’t know how it works throughout the rest of the country, but real estate taxes vary significantly here in St. Louis County depending on where you live. It’s based on the value of the home. There are two concerns most associated with taxes for the new homebuyer.
A. What are the taxes on the particular home they are buying? This is a pretty simple aid from real estate agents. We have the tax records on every property available for sale. Simply showing what the current homeowner paid for the year should go a long way into helping to know if those taxes fit within the homebuyer’s expectations.
B. The second concern of many homebuyers with regards to taxes is the question, “will my taxes go up?” Yes they will. Real Estate taxes rarely go down, so it’s only really a question of how much higher they will go. In St. Louis County, there is a re-assessment every two years…so we are seeing this huge increase in home prices not yet reflected in the real estate taxes. I think just working with the understanding that your taxes will always go up should help with your concerns.
3. Buying in an unfamiliar area New Homebuyers are especially concerned about where they buy for a whole host of reasons. This is where your experienced and professional real estate agent should be able to help. One of the things I’ve noticed is that when people are looking to buy homes, they rarely ever visit the areas they are claiming to be interested in other than the times they are looking at houses to buy. This is a mistake! For example, someone looking to buy in Tower Grove South while living in St. Charles is going to be in for surprises if they are not familiar with the area. The cure? Go! Be a part of the community. Shop, Dine, go to events before you buy. This is the best way to buy in an unfamiliar area and should really help with those concerns
4. Finding a suitable home within a budget Given that it’s such a large investment, things can go wrong with budgeting for a home. I mean, the 30 year fixed mortgage is based off of your employment and income today…who really knows what is going to happen 5 days from now, much less 5 years? When we look for homes, one of the most important questions up front is where you might like to live. And, that’s kind of a 2 part question.
Let’s say your budget is $300,000 and your desired location only has homes that sell for $400,000 and up. That’s going to be an issue. There’s really no overcoming this particular issue at this time. Maybe the market will change down the road, but if you are stuck on an exact location that doesn’t have the type of housing you need in your budget you have to move on to the next part
Let’s say you are open to any area that has homes in your price range of $300,000. While this definitely opens up your search, it comes with the downside of perhaps not knowing the area very well. So there’s a process here. If you know you aren’t going to be able to live in one area, it’s on you to discover the nuances of a particular area to be comfortable with living there.
5. Overpaying for a home I can understand the homebuyer concern of overpaying for a home. But what does that really mean? As an example, I bought a house in the 170 range that I could probably sell tomorrow for low 300’s. When I bought the house a decade ago my neighbors thought I was nuts.
Overpaying relative to the market, I can certainly understand that concept. This comes from not researching or physically seeing a bunch of homes in an area with which you have interest. After you see 10, 15, or 20 homes in a certain area, you are going to understand the pricing and I doubt you will end up overpaying.
6. Crime Crime is a reasonable concern, of course. Unfortunately, crime is subjective for many people. Some people think that robbery is totally ok in an area but a murder isn’t. The best way to understand an area is to spend time there, get a sense for yourself. There are some neighborhoods I’m aware of in St. Louis that get a very bad reputation but the reality of day to day living doesn’t really warrant the reputation.
7. Proximity to family and friends Your family, your friends…many buyers want to be closer to people they know. The concern here is that sometimes families end up getting priced out of neighborhoods they’ve lived in for generations. For an in metro move, the family and friends concern is much greater than someone who is moving from across the country, but I am aware of the concern and I do often get asked to find homes for sale within a certain distance from a family member or friend.
8. Commute times Those in the laptop class have almost totally eliminated this issue. It’s why we’ve seen a significant shift out of big cities. However, if you work in an industry where you still need to commute, the commute times are important. When working with a doctor a few years back, he wanted to live within 15 minutes of the hospital he worked. With the technology we have in our property searches, I can set up listings that are within 5 minutes or 10 minutes of a specific location, even in rush hour. Still, there’s no substitute for physically driving a route, and that’s what I tell buyers to do when they’ve gotten an accepted offer on a home. Pretend you live in the house…leave your home a little early and make the commute as you would if you live there. It’s an easy way to ease commute time concerns.
9. Home Values The minute you actually buy a house, all of a sudden stable home values matter. Here are some of the ways I look at finding a home with a stable home value.
a. Look at the house as a multi year investment. As in, you are planning to stay in the home 5-10 years. The market can swing in wild directions but tends to even out over years.
b. Understand that buying homes in a fringe up and coming area can be super risky either way. You could be sitting on a future gold mine if the re-development of an area goes well. You can also be sitting on a loser if the path of re development didn’t continue to your block. If you are buying in these areas, just know going in what the risk is.
c. Buying a house with what I would call timeless features will go a long way into a home keeping it’s value. Large bedrooms, 3 or more. More than 1 bathroom. Off street parking. Lots of square footage. These features are always more valuable than homes that do not have them.
d. The construction of a neighborhood matters..at least here in St. Louis. Where I work, a brick house will usually bring more than a frame home. And there are pockets where there will be frame homes together in a subdivision…in that area, the sale prices overall will be lower than the brick homes outside of that pocket. You may not have something like brick vs frame home where you live. But you might have square footage differences, etc. If you can live in a more desirable neighborhood due to it’s features, you really might have a better shot at home values being stable.
10. Uncovering a major issue after moving in The biggest concern I think most home buyers have is buying a home that has major issues they were not aware of before their purchase. This can happen for a number of different reasons…but one that I wanted to focus on is buying a home as is with no inspections. This is a recipe for disaster. ALWAYS keep the option to have a professional inspection before buying any house. If a house comes up for sale and you aren’t going to be able to beat an offer without inspections, move on to one there is.
Even with a property inspection, there are always things that are wrong with a house. Sometimes, they happen and the seller really had no idea. Rather than getting into a situation where you have to sue, which can be expensive and you could lose, always try to be aware of anything that seems suspicious before you close on the sale. Point these things out to an inspector. Ask questions. It’s ok.
Should you find that you’ve bought a home that does have major issues, make sure that you use qualified people to make the repairs. Sometimes a bad issue gets even worse without the right expertise. As an example, if your basement leaks, and you happen to spend good money on a repair only for the basement to leak again, you’ve compounded the problem.
Finally, it’s completely normal to have concerns about buying a home. There are always issues that can come up. I’m biased and I believe that a good real estate agent working for you on the buyer side is the best way to buy a home…you’ll always have concerns, even during home ownership….but at least you have someone working on your behalf to hopefully eliminate most of them.
Sources: Me
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