Real Estate Articles
Timing is Everything when Purchasing Real Estate
Purchasing Real Estate Big Picture
Everyone wants to be a market timer these days-someone who buys at the lowest price and sells at the peak of the market. In the big picture world, that is the ultimate in market timing. But in the not-so-perfect world where a job or family change can trigger the need to buy or sell, there are other important “chronological” matters to consider in real estate that are often overlooked and can be almost as important. These are things most of us can have some control over.
The Offer Deadline
One overlooked aspect of buying a home is how long to allow the seller to consider your offer. If you request an answer quickly, you may scare them off, but if you wait too long they may have an opportunity to “shop” your offer. Even the day of the week you make the offer is important to consider. If you do it on a Saturday, the sellers will want to have the weekend to see if other buyers come through and make offers. If you do it on a Monday after an open house, the sellers might be willing to respond within 24 hours.
Buy First or Sell First?
People can get caught up in the fun of finding a new house and end up having to take out a “bridge” loan on either their new house or their unsold house to pay for the new one. Timing is critical in this scenario if funds are tight. The standard agreement of sale does not allow the buyer to opt out if their existing house is not sold or to move the closing date, so buyers need to time the sale correctly in order to buy without heavy interest costs (sometimes up to 12%). A good mortgage person should walk buyers through their options and buyers should consider carefully before buying the new house first, especially in a downward market.
Interest Rate Timing
Another trap for the unwary is signing an agreement with a closing date 3 months away to accommodate school schedules or the seller´s needs and then finding out that most lenders will not commit that far out on an interest rate. The buyer then has to risk that rates might go up such that they cannot qualify for the loan or pay extra to lock the rate for the longer period.
Most home purchases involve some type of inspection-even in the worst of buyer markets. To make the offer more attractive, a buyer might agree to conduct those inspections within a very short period so the seller is not concerned that the deal will fall apart after a long delay. If the agreement is signed on a weekend, as many are, the period to get inspections done usually starts to run immediately, even though many inspectors are not open for business to schedule the visit until Monday. Throw in a holiday, and the buyer is up against a difficult task. A seller having second thoughts might not agree to extend the deadline if this happens.one with a license to drive your child around, so why would you think anyone with a real estate license can help you make a huge investment decision?
I am appalled at how the media handles information about the housing market. It is amazing to me how little some of the authors seem to know about the topic, yet we read them all, don’t we? Real estate agents have a duty to get more involved in the process of reporting on real estate by offering to inform these journalists. All real estate is local, but the really sexy stuff is often in other markets, so that is what we hear about. We local real estate agents know our market—let’s share that knowledge!
Like the topic of weather and unlike the topic of politics, real estate is a safe one in almost every conversational situation. People ask me how the market is at every function I attend. They want facts and statistics—how far have prices fallen; are homes staying on the market a lot longer; which ones are selling and which aren’t; how much did the one down the street finally sell for?
I think what people really want to know is: how will my home and its value be affected by this perceived downturn in the housing market? And that is where the universality of the topic ends, because if there is nothing else true about real estate, it is specific to the location. Each market is different. It varies by neighborhood, the home’s age and size. Particularly in Philadelphia and its suburbs.
The truth is that our market generally has slowed but the appreciation rates for our area were so unrealistic recently that the slowing is more of a “correction” than a bust. And there are fewer houses on the market than last year at this time which are taking a bit longer to sell. This is not the crisis of other regions that we have been reading about, though.
We real estate agents need to spend some time learning the way market statistics are created and manipulated. Then we need to make our knowledge available to the reporters who are trying to write about this so we inform them and educate them. That is part of our jobs, in my opinion. I urge you to cull through the information the media presents and be more informed so the next time you hear the topic brought up you will be the expert!