Countless times I have met people who are constantly looking for “a steal” for their next personal residence. However, those deals never come, or the home buyer does not want what would be considered a steal because it doesn’t meet their personal home criteria. So what happens in this situation? Here are 3 things that can occur when looking for the “deal of a lifetime”:
- They wait forever: The home search tends to take longer until they may or may not find that deal.
- It can cost them more money: Because of the wait, this can result in spending more money because of home appreciation or the “deals” attracted more buyers and it created a bidding war.
- Those that find the home of their dream first, realize the deal was there all along: Residential real estate is part analytical, part emotional. The emotionality of a home that made a buyer fall in love with it can make it a deal in itself. Or, as time goes on, one learns why the purchase was the steal they were looking for all along.
By way of example, I had a client who a few years ago bought a fixer for what was considered top dollar at the time. He bought it for $400,000, put $45,000 into it, and sat on it for two years. He decided he wanted to sell so we discussed values and even showed the home to prospective buyers without publically marketing the home. Can you guess what he sold for? Try $545,000! He made about $100,000 in two years! Another example is my condo. I bought it knowing the money I would put into it would make me break even. Sure enough I had an appraisal completed three months later, and what did I see? The condo, in only three months, appreciated 6%. That is faster than the national yearly average for condos.
The lesson here is to buy the home that you can afford in an area that works for you. If you love the home, then the value is there. If there are visual aspects of the home that you do not like, chances are you can make the change for a modest amount of money.
2 Responses
Great post Rick. You really nailed it. We have to protect buyers from themselves sometimes. We have so many clients who have thanked us for helping them out of this nasty pit.
Thanks Gary! Especially when the buyer is planning on living there for a long time, the could become irrelevant what they paid because of home appreciation.