Burning Down the House
Burning Down the HouseRates are up, inventory is down, and home prices are up. Housing remains out of reach for many. It’s hard out there if you are a home buyer. Yet higher rates and lower inventory may create an opportunity for those who are willing to stay the course. In my days as a basketball coach I’d remind players: “It’s easy to do the things you like to do. It’s doing the things you don’t like to do, and doing them well, that will make you a competitor and put you in a position to win.” (This holds true for life.) Start the home buying process or stay the course and with hard work and luck you might win. And then there’s this: There are an infinite number of ways to make home buying mistakes. Each new real estate cycle provides new opportunities to burn money. Don’t burn money. Part of our job, as Exclusive Buyer Agents, is to raise questions you might not due to the emotion of the moment. Selling stuff – homes, cars, investments – can play on that emotion. We don’t sell, we don’t play. When I started Homebuyer Associates, I called it the “boring, methodical approach to homebuying.” Thirty-eight years later I advocate the same approach
Let’s look at a few infinite ways to burn money – Burning Down the House – so to speak: 1. Money burn: Buying a home without an inspection contingency. Our clients have lost out on homes because another competitive offer waived the inspection contingency. That’s a good loss for our clients. We’d rather not make money than advocate waiving a home inspection. In fact, we wouldn’t agree to write an offer if our client wanted to waive the inspection. If you or someone you know is working with an agent who advocates waiving the inspection contingency, tell them to run away, fast. 2. Money burn: Losing earnest money. We’ve heard that some home buyers include a clause in their offer that, should they walk away from an accepted offer, will allow the seller to keep the earnest money paid. Our history? We’ve never lost a dime of our clients’ earnest money in over 38 years and 1,800 clients. Don’t burn money. 3. Money burn: Not knowing the value of a home. Most (many?) home buyers believe the asking price is the value of the home. It’s not. If the asking price is $300,000 and you pay $335,000, you believe you paid $35,000 more than value. If the home was worth $275,000, the math is easy. You didn’t spend $35,000 more than value, you paid $60,000 more than value. Don’t burn money. I don’t write this to cause anxiety. Rather, the take-away is to be methodical in your approach to buying a home. Set realistic goals based on information to defeat real estate anxiety. Focus on what’s attainable not on what’s not attainable. The home hunting process shouldn’t drain you. Done correctly the process should inform you and make you a better, more informed home buyer. It’s difficult to find a home when inventory is low. However, the real work begins with offer acceptance. I’ll offer one recent example (there are many others) of “real work” post offer acceptance. A. An inspection revealed basement issues with a home. The seller’s response was, “We’ve never had a problem.” That might have even been true, but we couldn’t have our client take that chance. Our work involved obtaining structural and engineering bids and negotiating with the sell side (It was an estate with 3 sellers.) to have the basement repaired by licensed, bonded contractors. The repair cost: $24,155. See number one above. Mr. Byrne sang (below) about housing in 1984. The outline for how to buy a home fits on an index card. The steps are simple, but implementation can be hard. Each step requires work by you and knowledge on the part of the agent. If you’d like to discuss your home buying options, we’re around to sit and talk over a coffee. Thanks for reading, This email was sent to [email address suppressed]. |
Infinite ways to lose money abound. (Can you say Cryptocurrency?) If you are buying a home, it’s best to ask questions and question the answers. Learn about home buying and develop a plan with a process.