Home prices in Seattle are up over 7% from July of last year. And the number of homes for sale is down 38% from last year (more details and stats from the Seattle Times article here). I could drown you in data to prove this, but I respect your time and my sanity, so I will get to the point. We are currently in a “hot market”. There are more buyers than there are people willing to sell their houses. Homes come on the market and are gone pending in just days, if not hours. This kind of frenzy can cause home buyers, especially first time buyers, to make mistakes. If I can save one home buyer from making a bad decision, than my job here is done.
1) Hesitation. Buying a home is a huge decision. And it can be a scary one. But in this fast paced, sold as quick as it’s listed environment time is not always on your side. I have had several clients who have let an amazing home slip through their fingers. In four cases, I have sent listings to my clients within hours of that listing hitting the market, only to have my buyers tell me they would love to see it on Saturday (and today is Tuesday!). Our experience has been that 75% of the time, that listing has gone pending long before Saturday, and the my clients never even got a chance to get in the doors to see the home. If your Realtor suggests that you really need to see a home TODAY, it might be in your best interest to make time in your schedule to see it. It may be gone tomorrow.
2) Making snap decisions under pressure. Just because this market is moving quickly, it doesn’t mean you have to make an offer on the first house that seems “okay”. I have seen clients totally overwhelmed by the frenzy of multiple offers and try to avoid the situation by jumping to put in an offer on a home they didn’t even really love. I WILL NOT let anyone put an offer in on a house unless I see the “I love this place!” look on their faces. Yes, the market moves fast. And so should you when you get the nudge from your agent to go see a new listing TODAY. But remember to take time to be sure that you have found the right home. Go get a cup of coffee and talk it over. Sleep on it. It is much worse to buy a home you don’t love than to miss out on a home that could have been “the one”. As my Dad always told me, “Houses are like buses. If you miss one, another will show up eventually”.
3) Overpay for a home. This one is easy to do. You have been looking forever for the perfect home. You may have a had a few get away (if you were hesitating) or lost a few in a multiple offer situation. And all that stress can cause you to throw money at a problem just to make sure you don’t lose out on yet another house. But don’t overpay! It can harm you in several ways. First of all, the best way to make money from real estate is to buy at the right price. You may not be thinking about selling your place now, but someday, the odds are that you will sell it and then you will be happy you got the home for such a smart price. Secondly, if you overpay for a house, and you are buying the home with a loan, the appraisal may not come in at the price you offered. If an appraisal comes back with a price that is different than the price you are paying for the home, it causes trouble. Let’s say that you put in an offer for $450,000 on a house, and that the appraisers report came back with a stated value of $430,000. The lender will not loan the purchase price of $450,000. If you have the financial means, you can increase your down payment by the $20,000 difference. If you are not in the financial position to do that, you will likely have your loan fall through and will be unable to buy the house. Talk about a heartbreak AND a headache!
I don’t tell you these things to scare you or pressure you. I tell you so that you can be informed about the realities of the real estate market today. For even more tips on avoiding Buyers Mistakes, check out this article from Trulia.