by Hank Miller
on Sunday, February 21st, 2021 at 5:21am.
We all make mistakes; the challenge is to keep them from being catastrophic. Rushing to buy a home and not doing proper due diligence…that can be both emotionally and financially crippling. Home buyer remorse is a major issue, 44% of buyers overall and 63% of millennials regret their purchase. Despite the grip of the pandemic (Feb 2021); records were inexplicably shattered in both the real estate and the stock market during 2020. Real estate heads into 2021 with historic shortages and mortgage rates too good to pass up. It’s easy to see why the impulse to buy is there, it’s also easy to see how not being very careful can lead to buyer’s remorse. It doesn’t need to end wearing a bag soaked in tears.
The Agent Problem
There are too many agents, over 2 million as of mid ‘20. There are too many agents that don’t understand how to evaluate a home, potential issues or how to effectively communicate with clients. There are too many agents that sell rather than counsel; that fail to critically review data and remain silent when they should speak up. These agents are often relatives, friends, golf and tennis partners or in the social circle of buyers; buyers feel compelled to use them. These are typically hobby agents dabbling in real estate when low hanging fruit is available. In ’20, 41% of buyers used an agent they knew or were referred to; 68% of buyers choose the first agent they spoke with. How is such little concern is given to researching someone handling one of the largest financial purchases people make? Avoid the dabblers, talk to more than one buyer's agent and Google every one of them.
Heart Over Head
Home buyers have to love the home they buy…or at least like it. It’s senseless to buy a home that stirs bile every time it comes into view. The emotional connection is legitimate and one that has to be made; if the buyer and family aren’t happy, what’s the point? But the head cannot be ignored; budget, commutes, schools, data and the pile of “real world” factors must be considered. Agents are critical here; a professional works with other pros like mortgage reps, inspectors and appraisers. Stretching on budget can be a disaster, so too can going down the rabbit hole of “the commute is an hour (each way), but look how much more you get”. Needing a home with a basement in-law suite and settling for a bonus room over the garage…not good. Determine what the most important things needed in the home are and stick to the list as much as possible. Fall in love with a home then back up, sober up and turn on the lights. If it looks good after a thorough scrub, then consider moving ahead.
Competition & FOMO
Home buyers at this time face multiple offers, off market listings and historic shortages of inventory. New listings are slammed as soon as they hit the market, if a home is active after a few weeks everyone wonders “what’s wrong with it”. This chart clearly sums up the precipitous drop in inventory.
In this environment it’s easy to say “I’m not losing this time”, especially since most buyers miss a few before going under contract. A professional agent is key here, they should do a deep research dive. They can offer strategies to make offers appealing and win when there are multiple competing offers. The importance of being prepared ahead of time cannot be overstated. Define success; what does it look like, where is it and what does it cost.
Buyers Become Sellers
Everyone buying a home will be selling that home at some point in the future. There won’t likely be inventory relief any time soon so buyers must buy smart. Expect to pay retail, buy in areas that have demonstrated appeal and stand the test of time. Resist as much as possible, the urge to push price; it may be required and in some cases it can be justified but tread carefully. It’s critical that buyers see and understand value trends; while another crash isn’t likely, the economic impact of the pandemic remains to be seen. Don’t expect to buy and immediately “make money”, a home’s value isn’t necessarily monetary. Some buyers will have a rough time when it’s time to sell, some are having a rough time now because they bought something they shouldn’t have. Thorough due diligence at every major step is vital; there is no substitute for experience and candor when navigating markets like this.
The Hank Miller Team puts 30+ years of full time sales & appraisal experience to work for you. Act with complete confidence & make sound, decisive real estate decisions.
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