Home Buying Reality

I recently worked with a buyer and it reminded me of a pattern that I so often see.  When people first decide to buy a home they are very excited and sometimes have unrealistic expectations.  I start them off by helping them get pre-approved with a lender.  This is very important since the lending requirements have changed so much in recent years.  It is important that they know how much they can afford and what their payments will be.  The buyers in this scenario are prequalified for up to $300,000 and they were comfortable with the associated payment.  We are good to go. 

I start to send them some active listings that are within their price range and meet their other requirements.  Pretty soon, they find a couple of properties they want to take a look at.  They are so excited to be on the hunt for their home and they are oozing with anticipation, dreaming of the great properties that await them.  They have heard how the rices have dropped so significantly and are ready to snatch up their gem.  I try to keep them in reality but at the same time not douse their excitement.  I schedule the appointments and off we go.

We are scheduled to see 5 properties and the buyer's know their dream home will be one of them. I have explained to them that the houses in their price range are going to need work.  They say they understand and do not mind a fixer but the area and square footage are the most important.  When we pull up to the first property the curb appeal is less than ideal but the buyers look past it thinking it would not be difficult to bring it back to all it's glory.  We go into the property and are hit with a musty, dirty carpet smell which is quickly written off to being closed up.  As we tour through the property their hopes are dashed as they find not only does the carpet need to go but the floors in the kitchen and bathrooms are vinyl not tile, the cabinets are knotty pine not sleek dark wood, the counters are tile with missing grout not granite, and there is a small wall heater not central heat and air.  You can see the disappointment on their faces.  They try and remain perky and assume the next properties will be better.  I remind them that homes in their price range in this area will all need work.  But they think I am crazy.  They have heard in the news how desperate people are to sell, how much prices have come down.

This story continues as we view the remaining homes.  All of the properties are in need of work and updating.  The chipper mood of the buyers has faded and they have decided the sellers of these properties are unrealistic and out of their minds.  They do not think the houses they saw would sell at the list price.  They consider putting in what they would consider a fair offer on one of the homes.  Because of the amount of work that they feel needs to be done to put it in the condition they want they want to submit an offer for $120,000 under the list price.  What the buyers do not understand is that these homes are priced for their condition and pretty much at market value.  Unfortunately market value is not determined by how much they can afford.

The end of the story is that the buyer's did submit a low offer on the property even after seeing the comps and what they were selling for.  They did not get the property because multiple offers came in at or above the list price.  It took the buyers awhile to get over the sting that their offer was unacceptable but eventually they did.  They became more realistic with what they would get for their $300,000 and made some changes to their search requirements.  It took awhile but we found it and they just closed on their new home.  It may not have been their dream home but it was a home that they could afford and would love.  It was their reality.