Tag Archives: First Time Buyers

Everywhere I Look: Condos!

No need to post a picture of condo developments; you know what they look like, right? They. Are. Everywhere. Throw a rock and you’ll hit one (well, don’t throw a rock). Well, so what?

“What” is that the number of resale detached homes is lower than it used to be, as builders swerve into the multiple housing structure lane. Look around you; these structures are going up all over the place, as the push to get people to walk everywhere plays out. Personally, I’m not seeing it for me; I have to have my AC in the summer heat and well, heat in winter. These grand, sweeping ideas work well for builders, who rake in the money; but in the real world, it’s not ever the best idea. My opinion, of course. And who’s gonna carry the GROCERIES? To be somewhat fair, more people can be squeezed into a square mile this way, which is usually the goal. And let’s put a pin in inadequate infrastructure to accommodate all the new cars, water usage, sewer usage…you get the idea.

Believe it or not, there’s still a housing shortage, particularly in detached, single family resale homes. Therefore, prices of those homes are not going down. Not going up like rockets either. What IS happening is that because condos and townhomes are ‘more affordable’, resale detached homes sit on the market a bit longer, up maybe 20 days more than a year ago. And, almost half of homes sold have sold below list price, which is unusual in our brains. In OUR brains, no buyer can ever offer LESS than list price, oh no. In OUR brains, our buyers had to offer more than list price. Not now, though. Not necessarily. Now, buyers are able to offer less…that is until we listing agents realize that the price structure has changed. I will say that I have encountered two multiple offer situations already, though. Both in detached, resale homes, by the way. I predict that will become more and more common. Some people don’t want to live in a stack, and they WILL pay above list price to make it so.

Now, buyers are STILL not really getting closing costs automatically paid all or in part by sellers. But it FEELS like there’s a bit more balance in real estate transactions, notwithstanding the new compensation law. In my business, I find things to be pretty much the same. I’m happy to say that NC has always done right by clients with respect to compensation. No hidden gotchas, no sleight of hand. Not in MY world and not in my companies.

Back to condos (and townhomes). They SEEM to be less expensive, until you factor in the high HOA dues these developments carry. It might seem like a way to get first time buyers into their own home, but often, that is not reality. The payment APPEARS to work, until you add in hundreds of dollars a month for HOA dues. This market is still a very tough challenge for first time buyers who are often trying to set up the rest of their lives at the same time. The home is just one piece of the picture. Now, I find many, many more disappointed first time buyer clients who just cannot make it work. And these are smart, hard working people. Look, if you are a first time buyer, just call me and let’s talk about it. The more you know up front, the better off you will be, and the less disappointed if you don’t know the whole story by the time you start looking.

Lenders try to keep a tool chest of ‘first time buyer’ products, but even with that, those HOA dues keep buyers renting. I don’t like that at all, and I wonder where this will all end up. I envision many empty buildings at some point in the future. Or buildings that were once condos becoming apartments… rentals, in other words.

Word on the street is that some of the Grand Poobah builders are going to lessen or eliminate incentives for buyers. I am not seeing that yet, but what I am seeing is big realtor bonuses offered by these same builders. What good does it do a buyer if their agent gets a big bonus? None. I think that should be illegal. The whole home buying process is about the BUYER, not their agent.

Some builders were offering low interest rates for a while, as they worked out of a pool of cheap money they borrowed during extremely low rates. But I have a feeling those funds might be running low? Not sure. But I’m not getting the low interest rate emails I got last year; I know that. No, I’m getting ‘realtor bonus’ emails now.

Some news outlets are reporting efforts by builders to change the laws to allow them to put higher density developments in. There’s a bill. With a number. Seriously. In other words, if you think the next door neighbor’s house is too close just wait. It will get worse. Builders are a huge, rich lobby. If you want a detached home with a yard, better not wait. I’m serious about that. If there is a push to get everyone to just rent, well the direction we seem to be heading might be working. Buy your yard now, is what I’m encouraging you to do.

Bottom line is this: Buying and selling homes has not gotten easier. For us agents, it is still critical that we keep our eyes open, particularly when dealing with ‘flip’ products. Just because everything inside is new, doesn’t mean the pipes are in good shape, floor joists and roof rafters are stable, you get the idea. Make sure you have a good real estate agent! We, who are good ones, are worth our weight in gold.

Make sure your agent is on top of the statistics and the news, too. That way your negotiation position is stronger. Knowledge is power. If I can help you, I’m here, not going anywhere. I’m Brenda, with Premier Advantage Realty. I’m online and I’m at 919-210-6113.

For First Time Buyers: A Word of Advice

I am a real estate agent in the Raleigh area market, where we are in a terrible housing shortage, particularly in the first time buyer price point.  Here, many of our first timers use USDA funding in order to get 100% financing, and most of them don’t have enough discretionary money to cover all of their closing costs (some can’t cover ANY).  Often this is because they’ve just finished paying off student loans and can finally, barely qualify to buy a home of their own and get out of the rental racket.

Today, for every home under 150K that pops onto the market, there are about 8 offers on the table in a matter of hours.  First time buyers are offering at LEAST $5000 dollars above list price in order to have a remote chance at having their offer accepted and I’m guessing many of these folks will be disappointed by a low appraised value, potentially after they have spent a lot of money on inspections.  Bad idea.

What this means is:  1) The home is most likely NOT going to “appraise” at that list-price-plus-closing-cost price, because homes are ALREADY priced at the high end of the range due to demand.  2)  If the home does not appraise, then young buyer must bring to closing the difference between appraised value and offer price, or walk away and lose the hard earned due diligence money they put on the table with the offer.  First time buyers looking for sellers to ‘pay their closing costs’ cannot AFFORD to lose that due diligence money and forget about having them bring the difference to closing.  And by the way, sellers are taking FULL advantage of the situation by asking for HUGE due diligence amounts from people barely able to get into the market in the first place.  They do this because the likelihood of an over-list-price home appraising at the higher value is LOW; so the seller stands to be able to pocket whatever amount of due diligence money the potential buyer put forth.

First time buyers, please listen carefully.  If you offer above appraisal value and it actually works, you go into your first home “upside down”.  What you WANT is to walk in with some equity, and in this market that’s hard to pull off; but going in under water is just a bad idea.

So please consider this:  SAVE money to pay your closing costs, or at least SOME of them,  yourself.  That way, you can offer full list price and ask for ZERO closing cost assistance from the seller.  OR…ask for a monetary gift from a family member (with a letter stating such). You might just have a chance at having your offer accepted in that circumstance, and you won’t be upside down when you close.  Talk with your lender about what you have to do in order to accept a gift and make sure that’s allowed by your loan type, but it’s usually an option for you.

Listen, if you have to finance in your closing costs, you are advertising to a seller, who already has a pile of offers on the table, that you can’t afford the house, or that you have no skin in the game.  Either or both of those advertisements will get your offer rejected in record time.  Sellers want to know that you have invested enough to stick around through the whole process, because if you walk away, that seller has lost VALUABLE marketing time.  Sellers don’t like losing hot market time, with perfectly good reason.  If they view you as cash-poor, that makes you a bad risk in their minds.  In this market, sellers don’t NEED to accept a bad risk. There are too many good ones on the table.

This market is NOT the one where you can expect the sellers to fund your way into a house.  YOU have to contribute.  If you cannot, your best bet is a new home from a builder.  Builders have deep pockets and usually offer some closing cost assistance, although it’s minimal in the under-150K price point.  In short: you need money to buy a house.  Remember you may have to pay for inspections, and that can add up pretty fast if you do home, HVAC, roof,septic, well and crawl space inspections and a survey.

I love working with first time buyers, but if I always, always have to be the one to tell you that won’t work, you can’t do that, your offer was rejected, etc…then I end up being the bad guy and I’m not a bad guy.  This is just a twisted, crazy market, and your only viable option is to understand the market and play by its rules.

I once had a builder tell me he was just going to “ignore the market” and keep selling.  That was when the market was crashing.  Want to make a guess how that turned out?  It was a disaster, of course!  You cannot just ignore reality; you MUST operate within it.

So…know what you face going in, prepare monetarily, and prepare with patience.  You may submit several offers before yours gets accepted.  Meanwhile, SAVE SAVE SAVE!  I wish you the very best of luck and I’m proud of you for getting to the point where you can buy your first home!  Let’s get together, talk things through, and get you prepared for this crazy market.