By Steve Tytler
Question: I have been trying to buy a home for three months. It seems to be an investor’s market. What is the best strategy for buying a house for a “normal person” with a good job with a good company, with excellent credit, preapproved financing and down payment saved?
Answer: You are correct, there is a limited supply of “nice” homes for sale that are well-priced, and if they are located in desirable neighborhoods, they are selling quickly.
Many of the homes for sale today are rundown bank-owned properties or homes in foreclosure, or homes where the owners are not willing to lower their asking price to current market values. That leaves a relatively small number of homes for sale in the “sweet spot” where they are properly priced, well-located and in good condition.
That’s why we are now hearing stories of multiple offers on some homes for sale. When you have increasing demand for homes caused by extremely low mortgage rates and a relatively small number of desirable homes, that creates a supply-demand squeeze in the seller’s favor.
Now please don’t misunderstand me. We are nowhere near the panic buying days of the housing boom during the past decade when home buyers felt they had to “buy now or be priced out of the housing market forever.”
Home prices are starting to appreciate a little in some highly desirable areas, but in most parts of the Puget Sound region prices are still flat. As a general rule, the closer a home is located to major job centers like downtown Seattle or Bellevue, the faster it is selling.
Homes located in the outlying areas are selling slower. As always, the most important factors in determining a home’s market value are “location, location, location.”
Therefore, you have a couple of choices if you want to find a nice home to buy.
One choice is to widen your search and look at homes located farther away from the major job centers. But keep in mind that the reason those homes are selling slower is because they are less desirable due to fators such as longer commute times.
So when you sell your home in the future your home’s price will be impacted by the same negative marketing factors facing the current sellers.
Another choice is to find a good “buyers agent” who will scour the market for you on a daily basis and be prepared to rapidly make an offer on a good deal when it becomes available. Some real estate agents require you to sign a contract to act as your buyer agent.
Before you sign any contract, you should interview several agents to find out exactly what they will do for you and how they operate.
Once you have found a good real estate agent with whom you are comfortable you must look at enough houses so that you can quickly recognize a “good deal” when you see it.
Many years ago, when I worked as an agent, I would get frustrated when I showed buyers a home that I knew was a “steal of a deal,” but they were reluctant to write up an offer because they had not seen enough houses yet.
Invariably, by the time they agreed to make an offer on that house it was already sold to another buyer who recognized its value.
Don’t put yourself in that position. Even in a slow housing market, well priced homes sell fast.
So those are basically your two options: Look at homes farther out or hire an agent to hunt for a home for you.
I know it’s tough, but the good news is that this may be a sign that the housing market is finally starting to “bottom.” We won’t know for sure until home prices rise for a couple of years because you can only truly spot a market bottom in hindsight.
But if we are at or near the bottom of the housing market, you probably won’t have to worry about your home’s value falling much, if at all, over the next few years. Just remember, you are buying a home as a lifestyle choice, not an “investment.”
Steve Tytler is a licensed real estate broker and owner of Best Mortgage. You can email him at firstname.lastname@example.org.