First Time Home Buyers Tips: Part 3
The final part in our 3-part series on First Time Home Buyers. The first two parts of the series focused on the monetary and financing parts of buying a home. This final part will focus on the actual real estate and the hunt.
HGTV has popularized home buying and renovation. From Love It or List It to Property Brothers, to Chip and Joanna Gaines and many more, real estate is now Hollywood. It's a good thing for my business because it gets people (more specifically, women) in love with the thought of buying a home. They take things that are rough and make them beautiful. They find homes and get great deals. It seems so easy, and really it is, if you understand it.
Look for aesthetic only remodels. Carpet, Paint, Landscape and General Clean Up of the home. I have made a living on turning rental units over. Cleaning up after one tenant quickly and prepping the property for the next tenant. These are the types of "Fix and Flips" you should look for.
Unless you are a contractor, have a brother/sister/dad/mom in the contracting business, taking down a major remodel can be time consuming, expensive and exhausting. I just finished my LONGEST remodel of 7 months and it still has about 2 weeks left of final touches. It's been trying to say the least.
Taking on a project of remodeling the kitchen, bathrooms and moving walls to get that "open" concept can be very rewarding, but it can also become the project that should have never been. Keep it simple, look for "easy" remodels. These carpet, paint and landscape remodels are quick and you can easily stay in budget.
Look for properties that have been sitting on the market 2-3X the median days on market. In Fort Collins, for example the median days on market is sitting around 45 days right now. That means that from the day the property goes onto the market, to the day that it sells is 45 days. Look for a property that has been on the market for 90 days or 135+ days. These properties could be potential steals. Although the list price may be much higher than you'd want, it could be worth being opportunistic and submitting a strong, but aggressively priced offer. You never know, you could get a deal!
Real estate and the position of seller's changes every day. An offer that he/she may have said no to yesterday, may be just the offer they are looking for today.
Look for properties with price reductions. Every 2 weeks in Fort Collins, my BiWeekly analysis is suggesting anywhere from 10-20% of the homes on the market are reducing their prices. The median reduction as of late, is around $10,000.
There are many strategies when an agent and seller decide on listing a home for sale. One of them is going for the home run sales price. That needle in the haystack buyer that comes through and just needs the home. Well if they don't get that price and have to reduce the price to make it more appealing, maybe then more buyers will look and potentially make an offer.
Why I believe price reduction homes can be opportunities is that we all have our own circumstances and some times, sellers have to sell. For whatever reason, they just have to sell. The easiest way to sell? Lower the price, lower the price, lower the price. Eventually, you, as the seller will find your buyer at a certain price. You, as the buyer could look to this and opportunistically offer on homes that are having one or multiple price reductions. You never know, you could get a deal!
Find a full time real estate professional. This last tip seems rather obvious. If you're going to be buying a piece of property worth $100,000+, you should probably work with someone who is in real estate for a living. Not the moonlighter, side hustler, real estate hobbyist. I am not saying they can't and won't do a good job, I would just put my faith in someone who has decided to dedicate themselves to their craft. Hopefully, that provides you value and secures your financial interests.
Be opportunistic. Just because a property is listed at $500,000 doesn't mean that it is going to sell for $500,000. If you are comping out the property and the numbers that you decide are fair and what works for you financially is $440,000. Don't be afraid to make the offer. Position yourself in a way that shows strength in your ability to close. Such as funds to close, strong employment, maybe previous properties that you have closed on. Some sellers are more inclined to work with someone who is willing and able than someone who is just throwing out flyer offers.
A point to be weary of here, is that real estate agents are sensitve folks. The listing agent may fight the offer price as much if not more than you, the seller, might. After all, their reputations and sales pitch are on the line. "Mr. and Mrs. Seller, your property is going to sell for $300,000." That may not reflect well, if they actually sell at $250,000. All that to be said, it is important to suggest why you are offering what you are offering. It may help smooth over the listing agent's presentation to their seller.
There are many other tips and suggestions that can help you buy a home and make it a very successful and smooth transaction. The previous 2 blog posts and this hopefully help you navigate the process a little better and keep some ideas circulating in your head. You, in the end, are going to be your first and last advocate. It is going to be up to you to watch out for your best interests. It is wise though, if you align yourself with a reputable lender and real estate agent who also want to see your long term success and not just a quick hitter transaction.