Don’t make this first time Home Buyer Mistake!

by boninm on August 12, 2010

First time Buyers Dilemma
What’s a Buyer to do?

We love working with first time Home Buyers – their excitement is contagious and it’s refreshing to see things from a new perspective. But oftentimes we run into a dilemma with first time homebuyers who have just started their search. The scenario usually happens something like this.

Our Buyer, lets call him Joe, sees a great place that has been on the market for only a few days. Joe is very interested in the property, so we go back to the office and look at comparables. After some discussion, Joe decides to put in an offer 10% below asking price – after all, this is a Buyers Market and all his friends have told him this is the way to go. Unfortunately, the comparables support the asking price.

Meanwhile, other Buyers are out there looking for similar properties, and they know a good deal when they see it. So we end up in multiple offers. Now the hard part!

Based on our experience, we know that Joe will need to make an offer at least as high as the asking price, and maybe even higher if he wants to be the winning bid.  But when we tell him this, Joe says – “In a Buyer’s market? I can’t go to asking and overpay for the property!” So we make the offer he is comfortable with, and unfortunately his offer is not accepted.

So the dilemma is getting our Buyer to understand they will need to go higher in this situation without seeming too pushy. If they lose the property, they usually go into a mourning period over the loss. But if they do go higher and win the property, they think they overpaid.

So what should a first time Buyer do in this situation? Our recommendations are:

  • Don’t get caught up in the media hype – the media reports on nationwide trends, which include places like Nevada and Florida. But the truth is that Real Estate is local, and can even vary within a town. So don’t base your decisions on nationwide trends. Review recent comparable sales to better understand the local market.
  • Trust your Realtor – this may be your first time buying a property, but hopefully you’re working with an experienced agent, so it isn’t theirs! They should be able to give you advise, and provide options on different scenarios.
  • Friends and family mean well, but … – their Real Estate experience may have been in other locations or long ago, and are not necessarily valid in today’s market.

So if you do find yourself in this situation, and you lose in multiple offers, we recommend that you chalk it up as a learning experience. There will always be another property – if not now, then later on. You will be that much wiser next time.

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Thinking of improving your home? Don’t make these 3 costly mistakes!

by admin on July 25, 2010

Many homeowners are opting to improve their current home rather than buy a new house. So what are some of the pitfalls to watch out for?

Don’t Over-improve – When making improvements, it’s important to consider what houses are selling for in your neighborhood. In other words, does the neighborhood support the planned improvement? For example, if houses are selling for $250,000 and you want to renovate your kitchen, spending $50,000 might not get you the return you are looking for. But if property values in your area are $500,000, a $50,000 kitchen might be a good investment.

Keep it neutral – While you may be crazy about that hot pink tile for your new shower, not everybody may feel the same way. When making changes that are more permanent in nature, you may want to consider if it will improve or detract from the general appeal of your home. Some things like paint are easy to change, while others will be costly to address.

Don’t cut corners – Many homeowners want to tackle home improvement projects themselves, while others may hire professions to do the work. There is no right or wrong answer here, but some things to consider before starting:

  • Have a plan – It’s always good to start with a plan. A major renovation may need a design plan (architect, computer software, Home Depot/Lowes), etc.
  • Don’t get in over your head – know your abilities, and when it’s time to call in the professionals.
  • Know your contractors – If you decide to use contractors, be sure to check them out. Obtain references, make sure they are licensed and insured, and that they take out permits when necessary.
  • Have a schedule and a budget – Every project should have a beginning, middle, and an end! And of course setting a budget is critical! You will be tempted to keep adding to your costs as you go along. Warning! – keep the bottom line in mind.

When making any home improvements, your own needs, style and wants should come first. But re-sale should also be a consideration. It may be a good idea to check with your Realtor to get their opinion on any planned changes.

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