Renter thinks renting is better than Buying....We Say No Way!

Question: In this poor housing market, why are people still buying homes? I am renting in an apartment complex and I don't have to worry about any real estate mess.

Answer:  Although real estate moves in cycles, sometimes up, sometimes down, over the years, real estate prices have consistently appreciated. There are bad cycles in every investment. Nothing is great ALL the time. 

One of the greatest benefits of owning your own home is the freedom it can give you. If you live in an apartment, you have to deal with thin walls and noisy neighbors, and the task of keeping your own household relatively noise free. Your landlord may come and go, and there are many rules that limit everything from whether you can have pets to the color of your walls. If you own your home, you can do whatever you want with it. You can hang pictures or paint the walls as you please.

Owning a home provides more control over the children than in an apartment complex. In a neighborhood, kids usually play in the yards or go to friend's house a few doors away. My clients have told me that in an apartment complex they never knew where the kids were. They could be in any of dozens of apartments, doing who knows what. In a house you get to know the neighbors and watch out for each other's kids.

When you first purchase your home, your down payment is your only stake, as you pay down your mortgage, you own more of what may be an increasingly valuable property. This is called equity. Unlike renting where your rent can go up yearly, fixed mortgage payments will stay the same even as the market fluctuates.

Since the days of our country's Founding Fathers, pride of ownership has been a reflection of the value Americans place on freedom and self-reliance. Ensuring the growth of homeownership has always been a major objective of American national policy, dating back to the Homestead Act signed by President Abraham Lincoln in 1862, which provided ways for settlers to claim public property as their own.  We are happy that you are content in your apartment, but homeownership continues to be the American Dream.

Question:  I have a really nice home and it isn’t selling. I think it’s worth more than I’m asking for it. Any suggestions?

 Answer:  A Sellers Lament:

It’s been 53 weeks since my house went for sale.

My home must be invisible here on Timberline Trail.
Buyers should be coming round after round,
Because I buried St Joseph into the ground.

The Realtor said it needs some cleaning and shining.
And to transfer my energy to updating, not whining.
I’m changing some fixtures and adding new floors,
In hopes to see more buyers come through those new doors.

My plan must be working, more buyers are here.

I can feel it coming, a sale is near.
But another month passed, with no offer in sight,
That light in the tunnel is not looking too bright.

 The Realtor said to lower the price.

Then I told him my thoughts, which weren’t very nice.
I’ll give it some thought, I disgustingly said,
As he left my home, shaking his head.

My house is worth more, I’ve lived here for years.

So many memories and blood, sweat and tears.
But I lowered my price, just as I was told.
And a couple weeks later, my home finally sold.

When Selling, Look at the Whole Picture

Question:   I knew real estate prices in my area dropped, but I was shocked when a Realtor told me how much my home was really worth in this market. Should I wait for the market to boom again?

Answer:   Time marches on, not backward. Waiting for real estate prices to return to pre-recession levels before you put your home on the market, means you don't understand that time only goes forward. Forward from here, there are no real estate booms immediately on the horizon. Yes, we'll see booms again, but wait for the next one, and you'll end up financially behind all those that keep their money moving and multiplying in today's markets. This waiting loss is compounded by the fact that every passing year makes your house one year older. That's "older" in every way from dated decor and appliances to out-of-date plumbing and everything else. This means that, when real estate prices increase, your home will be discounted by the renovation factor - the perceived cost of bringing the house up to current standards. If your resale home does not look "nearly brand-new," buyers see second-hand real estate which warrants a second-rate purchase price.

Look at the whole picture: As a Seller, you can gain in the long run if you buy a home in a location where market values have dropped, just like they have in your current area. It can give you the opportunity to buy your dream home at a big savings. Here's why: Say the market value has dropped 30% in your area, and 30% in the area where you can buy a larger, more modern home with everything you want, then since your new home is worth more than your current home, you are actually coming out ahead! 

The net gain from selling and buying is what should be considered, not just the profit from selling. Often the obvious gain in selling is to be free to take the next step in your life and to move to a new home, ready to start a lot more treasured memories.

Multiple Offer Situations

Question: My son made an offer on a house. If there are multiple offers, how are they handled in a fair manner? If another buyer offers more money, will my son have the chance to up his bid?

Answer:   With multiple offers, the owner (or banks if it’s a foreclosure) usually counter back all parties and ask them to submit their highest and best offer by a particular date and time, giving your son another chance. However, if there’s a clear distinction between the offers, i.e. ‘one is all cash, at or above asking price’ vs a less than asking price, fha loan, perceived as a weaker offer, the owner may very well pick the best offer without countering the other ones. Your son’s agent should be in contact with the listing agent indicating that you would rather see a counter offer than a rejection. But in all cases, if one offer clearly stands out considerably from the rest, that buyer usually ends up getting their offer accepted.

Cash Buyer

Think working with a cash buyer is easy? We received proof of funds. Hundreds of thousands of dollars available in her account. When closing time comes, the Sellers, sellers Realtor and attorney, the closing agent and the Attorneys paralegal have all worked on this closing and are in attendance. But the buyer did not show up. She is busy, has kids to pick up. Can't make it today. Bla bla bla.

After several threatining phone calls to the buyers real estate agent, he calls back to say he doesn't know what is going on, because he hasn't done anything since he showed her the home.  (Side Note..... this is why you want a dependable Realtor like us, who are there for you when there are problems to solve).

The sellers attorney calls the buyers attorney. What is going on? Buyers attorney said her funds are not available today. So he doesn't come to the closing and doesn't let anyone else know about this.

Day 2: Buyer shows up and signs the closing documents but still has no funds available. Sellers attorney calls the buyers attorney. We need to know the truth here. What is going on? The sellers don't know if they should move out or stay. Buyers attorney says he is going to Chase bank with her client tomorrow (Day 3) to see why the funds are not available.

Day 3 (Noon) Still have not heard anything. Makes you wonder how people can be like this. No concern for anyone but themselves. How do you put sellers through something like this without caring?

Lesson learned. Now we as Realtors have seen just about everything. Cash buyers will now need quadruple the usual earnest money if they are cash and want to buy one of our clients homes. Enough is enough!