What to do? Buy a house now - or wait for home prices to go down?

Most every buyer asks that very same question, and there is no stock answer that will be good advice for every buyer, despite what some agents will tell you. It's not always the best idea to buy right now, nor is it always the best idea to wait.

Here are some questions to ask yourself to figure out which is best for you, and if you want more advice after you read this, I am only an email or a phone call away. :)

If at all possible, I am of the mind that you should buy a home in this market if you can. Prices are low, interest rates are low, and you may never get those two factors to converge at this level and create this same opportunity again.

How  is your credit? If your credit is very good and you have enough for a downpayment and closing costs, go ahead and buy now. The interest rates are very low, and if they went up just one percent by the time you decided to buy, the same house you can buy right now for $500,000 and a 10% downpayment will cost you an additional $275.00 per month, and extra $3,300 per  year, or almost $100,000 over the life of the loan. Do you want to needlessly spend an extra $100,000 by waiting?

How is your job history? If you have had steady employment in the same field for at least a few years, and have good credit and at least 5% of the purchase price, you can buy right now, and it's a good idea.

Do you have a lot of outstanding debt? The bank's underwriters work on debt to income ratios. This one is not a cut and dry answer if you have a lot of debt  that can cut into your borrowing ability. It's worth talking to a mortgage broker to see whether or not the funds you have in the bank can go towards satisfying some debt to help you to qualify for a loan. If you don't want to call a mortgage broker just yet, I can give you an idea over the phone as to what the next step would be, and if it is feasible for you to proceed.

Have you been pre-qualified for a loan?  If you have some idea that your credit is good, call a mortgage broker to see what you can qualify for as far as a loan is concerned. It doesn't cost anything to ask, but remember don't give out your social security number to a mortgage broker until you are sure you want to purchase something, adn have talked to your agent (me!)

How "liquid" are you? You really can buy a home with as liittle as 5% of the total price. Closing costs can be negotiated, but you will have to have some funds avaialble to you. If you have funds, but they are not readily available or liquid without penalties, you may want to wait- but it's definitely worth looking into further, as the costs of obtaining your funds may be far less than you think, and the money you save by purchasing now instead of later may greatly offset it.

How much of a downpayment do you have? Without depleting your bank account, do you have enough funds for a downpayment and closing costs, or will we need to negotiate some of that with the seller.  Five percent of the purchase price is an absolute minimum, and we can go from there.

Do you need a tax write-off to offset your income? f you are renting and need a write off, a home is great place to start. Talk to your accountant, and then call me.

Are you prepared for homeownership? Lastly homeownership is wonderful, and part of the American dream, but you have to be ready for it, and the upkeep and maintenance that you have not had to do as a tenant.

If you need some advice because things don't seem so cut and dry as to whether you should or can buy right now, call me or email me. I will do my very best to assist you with your goals, and if that means  advice to you to continue renting, or to make some lifestyle changes before you buy, so be it. You'll get straight answers from me. Twenty-seven years of experience in real estate sales and good, solid advice . You can depend on it.

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Should you buy that less than perfect house?

The answer to that question has to, and will be different for everyone. If your opinion of less than perfect means that you don't particularly care for the landscaping, that's one thing. If it means that the house is missing one room for your needs, that's another. So how do you decide if this "less than perfect" house is the right one for you?

First of all, do not let ANYONE, including a spouse, significant other, friend, family member, (or heaven forbid) your agent talk you into purchasing something that you do not want, or are not quite sure that you want.

What are your wants and needs for your new home? Are they realistic within your price range?

When I meet new buyer clients for the first time, I sit down with them and ask them a number of questions to ascertain what is important and what is not so important. I also want to find out what is an absolute "NO",  no matter what. Sometimes, it's hard for a buyer to figure out what is truly important, what they can live with and what would be unacceptable.

A little give and take depending on the importance of whatever criteria you have can be crucial to  finding a great house.  Let's look at a few examples:

You want a remodeled kitchen.

Well, that's fair enough. It can be a major disruption to remodel a kitchen, and that's not even taking the cost into account. Have you looked at the kitchen closely? If the cabinets are in good shape and the color of those cabinets is acceptable, what about changing the hardware and/or changing the countertop? The cost of that can surely be negotiated with the seller (although we wouldn't necessarily tell them that)

You do not want a  house on a main road.

Reasonable, too. By the way, what is your definition of a main road? A road divided by "double yellow lines", one that has a State Route number attached to it, one that has commercial development down the street, or maybe something that doesn't fit into any of those categories? Well, okay... you can't change a location. But if the house sits far back enough, would that make a difference to you? If it doesn't, then don't bother looking at homes on main roads, and make sure that your agent knows your personal definition of a main road.

The walls need painting, the carpet needs replacing, the floors need refinishing, or other  minor cosmetics.

Some buyers just don't want to be bothered with doinf any cosmetic work at all. And that's fine too.
If you knew that a home had everything else that you wanted, but needed the floors refinished in a few rooms, would you still say no to it?  What if the cosmetic work was completed prior to closing with the contractor of your choice ? Would that make a difference?

The house has everything you want, except it has a pool and you don't want one.

Also reasonable. Let me ask you this-  If the pool wasn't there, would you want to buy that house? If so, we can always ask the sellers to remove it. Simple as that. And, yes,  sellers have done it.

What I am trying to get at is that sometimes we want certain things that may not seem so obviously attainable if we don't ask, or try and figure out an easy solution that you can live with.

Certain things can't be solved to your satisfaction. But lots of other things can. Sometimes it takes imagination, but one thing is  for certain. If the house is that close to what you want, there must be a way to make it work. A great agent can make it happen, and I just happen to know someone! You can send me an email and we'll get started anytime you like.
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I want that house! How many offers has it had?

There are many reasons you might want to find out how many offers a home has had if you are interested in placing a bid, and many reasons why an agent won't tell you. That doesn't mean that you shouldn't ask, or that you won't find out. If you are interested in a home, probably the most relevant question to ask is, "Are there any offers on the home right now?"

Bear in mind that the listing agent has no fiduciary duty to you, or your agent, and doesn't have to tell you if there are currently any offers on the house. In fact, it's the sellers choice. A seller doesn't even have to tell you that another bid came in while you are negotiating your offer. That seller can accept another bid right under your nose and not give you an opportunity to revise your offer, and that is perfectly acceptable. (not to you of course, but there are no laws against it.

Reasons to ask about previous offers:

If the home has been on the market for a short time, and you feel strongly that it's a good deal and would like to make a bid, its a good idea to find out if there have been offers already that were rejected, so you can place your bid accordingly.

If the home has been on the market for a while, and it seems reasonably priced, you might also want to find out if there was any offers on it. Could it be that the sellers are pretty much non-negotiable? hard to deal with? are there problems with the house? or has it been reduced from a higher price to fair market and it just appears that there may be a problem?

If there were offers that fell apart after the building inspection, what was the issues(s) and were  they rectified?

If you can find out the price and/or terms of the offer(s), you will already know what the seller will accept, and it may be less than you were willing to pay.

... and reasons why you may not find out if there were any bids:

Once word gets out about what an accepted offer was, that seller may not get that price again. (see this prior post on keeping quiet about the sales price)

If the home has had a number of offers and is new to the market, you might take either of two ways, and the listing agent has no way of knowing which- 1) you may want to just bow out because you don't want to get in a bidding war, or 2) you may think that the seller is unreasonable and won't negotiate at all. Let's remember that the seller may not want to get in a bidding war, either.

If the home has had a number of offers and has been on the market for a while, the agent may not want to tell you because it may look like the seller is hard to deal with, even if its not the case.

There is some differing opinions on whether or not it should be disclosed that there were building inspection issues that caused a deal to fall apart whether you SHOULD know what they were, and if they were addressed.  Have your agent look into this as much as possible, and delicately extract whatever information they can from the listing agent.

...or, there may not have  been any offers on the house.

It's definitely worth the effort to try and get as much information as you can prior to placing a bid on any property. Always do your best to try and obtain whatever background you can,  and have your agent delve into the property and listing  history. They really should do this without you having to ask. I know that  I always get whatever helpful information that I can for my buyer clients. When you are ready to become one, contact me.  I take pride in my profession and exemplary service.

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Is an Older Home a Better Value to Buy Than a Newer one?

There really isn't a solid definitive answer to this question. Buying old rather than new or "vice verse" may be simply a matter of preference for some, but there is something to be said about the benefits and drawbacks of both. You should look at each home to see how it suits your needs, and for its characteristics. Generally speaking, older homes may be in more established neighborhoods, offer more ambiance, and will usually have lower property tax rates. If you decide to purchase an older home, however, you shouldn't mind maintaining the home and making some repairs. Newer homes will most likely have newer systems, and may be more energy-efficient. People who buy new homes often don't want to worry initially about upkeep and repairs

So, is it wiser for you  to buy an older home than a newer one? The decision is yours..

OLDER HOMES:
Benefits: Lower taxes, charming interior, character, most often in established neighborhoods, mature plantings

Drawbacks: Mechanicals, Plumbing and Electrical may need to be updated. Roofing, windows and siding may need replacement if not newly rehabbed

NEWER HOMES
Benefits: Components are newer, last longer and may need less initial maintenance. More energy efficient. Larger rooms on average. Floor plans are tailored for today's living style. Stricter Building codes  on construction

Drawbacks: Taxes are higher on newer homes . Things still break! The house has not had time to "settle" in its foundation.
Some of the materials may not be of the same quality and still pass Building Codes. May be in a lesser established neighborhood.

Although I cannot speak for other parts of the country, I can speak of southwestern Fairfield County, Connecticut and the roughly 30,000+ homes that I have reasonably estimated to have previewed or shown throughout my career. There seems to be a pattern in the construction quality in certain years/ decades-  and I am not saying that any house built in the more favorable decades is that much better, or saying that any home built n the  other decades is a money pit. or of poor quality. It's a general statement, and each home has to be evaluated on its own merits.

My picks for the most solid construction  going back 100  or so years would be the 1920's through 1959,  1995-2005. and 2008+.

Least favorite years for quality and workmanship: 1900-1910, 1960-1980 and 1985-1990

If you see a home that you like and it's happens to be in the least favorite category of mine, it DOES NOT mean that you shouldn't buy it. Not all homes built in those time frames are going to be poor quality. Likewise, not all homes built in the more favorable years are going to be of the best quality either.  When you work with me as your agent, I will tell you if I have a concern about ANYTHING- my past clients will tell you that they always knew that about my services, too. I only want the best for my clients- and that includes you, whenever you are ready! :)

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Forbes.com Says That the Worst City to Rent in the Country is in CT!

If the worst city to rent a home in the entire country is right in your backyard, does that mean that you should make every effort to buy instead? ...What about if the worst TWO cities in the country  to rent a home are geographically connected to where you live?

When you get right down to it, the decision to rent vs. buy is a financial one, that comes with weighing in the pro's and con's of  both for your own financial situation and  the  economy. 

Just a few weeks ago, Forbes.com  published an article about the best and worst cities in the country for renters.  Marcus & Millichap, a real estate investment firm based in Encino, California, collaborated with Forbes on this piece, and rated the 44 biggest cities in the U.S. They based their  article on four criteria: First quarter average rent, and how much it changed year-over-year;  vacancy rates,  (higher vacancy rates mean lower rent prices), and the  cost of renting versus buying.

In short, New Haven, CT was the WORST city in the country for renters, with New York City coming in second. The fact that Fairfield County, Connecticut connects those regions should tell you something.  If you look at their findings, you would probably agree that our area, although not in their survey, is limited  for rental opportunities. Add the high inventory of homes for sale coupled with low interest rates, and at this point, it is very reasonable to surmise that it is cheaper to buy rather than rent in our area of  Southwestern Connecticut.

That being said, general geographical statements as to the real estate market may not be true in all cases- it is going to be somewhat different for everyone based upon their particular needs. I have found  an outstanding rent vs. buy  calculator,  courtesy of The New York Times which I would like to share with you.

Whether it's better for you to buy or rent, contact me, and  I would be honored to work with you. I work with Landlords and Tenants, as well as Sellers and Buyers.  You can be assured of the best representation and service- and that's my personal guarantee.

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