Having high standards in life is crucial especially when purchasing your home, after all it’s the biggest financial investment you’ll probably ever make. But how many buyers hand me a wish list that includes the earth, moon and the sky regardless of purchase price. Whether we’re buying at $500K or $1.5M so often I hear buyers say, “that’s all I get for a million bucks?” (or half a million or a million and a half….)
So much of my job entails educating clients about the market including what their purchasing dollars will actually afford them. Within the first meeting or first few property showings clients realize they need to reset their expectations because there is no such thing as the perfect property.
What comes out of this experience is an establishing of priorities and an understanding of what the client is willing to sacrifice. That usually means sacrificing certain aesthetics and/or size to get the best location and to stay within their budget. And sometimes, it means they have to increase their budget to get closer to their ideal place.
I have seen contrarian buyers who are qualified to purchase struggle with the decision whether they should rent or buy. With this particular buyer, the root of their struggle seems to be a matter of dollars and cents and whether they can time the market to make their purchase at a discounted price. Often these buyers try and strategize, believing that the market will pull back, cool off or crash and they anticipate that they’ll ‘pull the trigger’ in a down market. Whether it’s the buyer who just sold their home in multiple offers and made a tidy profit or the first time buyer who wanders through open houses year after year, more often than not these folks miss many great buying opportunities, which in the long run costs them money.
I have seen the first time buyer who rents a cool condo at $2,000 a month while waiting for the market to pull back and five years later has spent over $120K in rental payments….and is still waiting. I have seen the buyer who sold their house in multiple offers and rents while waiting for the market to cool off only to realize three years later that they have spent $62K in rental payments and their next purchase is going to cost them $80K more than if they had bought 3 years ago. It’s painful to think that those costs have eaten up much of the profit they made when they sold their home.
Strategy is essential when purchasing and yes, real estate markets fluctuate and yes, it’s better to be able to negotiate your purchase price than be battling it out with 7 other buyers in a competitive bid. But who has that magic crystal ball that can time the market perfectly? I recommend to my first time buyer clients that they purchase when they can afford to do so and to my seller clients to buy in the same market in which they sold. Afterall, you gotta live somewhere so you might as well own it.