Smart Moves

Buyin' in Winter

Are you a longtime renter determined to make your first home purchase as soon as possible?

If so, you need to face squarely the realties that confront all wintertime buyers, says Felipe Chacon, a housing economist for Trulia, which tracks real estate markets across America.

The biggest problem for buyers this season is that prices are continuing to rise, especially for homes in coveted close-in neighborhoods that are walkable and loaded with amenities. Meanwhile, inventories in these popular communities are still lean and, to make matters worse, many sellers take their property off the market in winter.

Moreover, a new statistical report by Chacon shows that those hanging onto a property that’s overpriced rarely take a necessary price cut in early winter. More sellers are willing to cut deals during the warmer seasons.

But all isn’t negative for those who intend to buy a house this winter, says Tom Early, a real estate broker who twice served as president of the National Association of Exclusive Buyer Agents (naeba.org).

“Comparatively speaking, mortgage rates are still breathtakingly low for buyers these days,” Early says.

Another positive, he says, is that a minority of those homeowners who’ve kept their properties on the market in winter are very anxious to sell. Often, these are owners who must relocate due to a job change or other reason.

“These are people who realize that time is money,” he says.

Here are a few pointers for wintertime homebuyers:

-- Search for highly motivated sellers.

As Early says, one key to finding a good deal is to search for owners who are exceptionally motivated.

“Wintertime buyers should look for ‘stale listings.’ These involve owners who’ve been asking too much and therefore have been unsuccessful in selling for months on end. They’re finally getting worn down and are therefore more willing to deal,” he says.

One way of identifying highly motivated sellers is to examine statistics. Ask your real estate agent to determine the average “days on market,” (from list to sale), for properties in the area where you want to live. Then look for homes in that price range that have sat unsold for a longer-than-average period, which gives them a stigma.

Before crafting an offer, also consider another set of numbers: the average list-to-sale price differential. If you note that most properties have recently fetched 95 percent of their list price, you might consider a first bid at a 5 percent discount off what’s being asked -- assuming your research shows this is warranted.

-- Don’t try to negotiate through insults.

Suppose you’re seriously considering a house that suits your needs. But you notice a few minor shortcomings in the floor plan, such as the location of the laundry room and the first-floor powder room.

Sid Davis, author of “A Survival Guide for Buying a Home,” says some purchasers attempt to strengthen their bargaining position by writing a letter that highlights a property's minor flaws or by noting the owners’ poor taste in decor.

Should you take this approach? Absolutely not, Davis says.

“Criticize the owners and you’ll only shoot yourself in the foot. The odds are they’ll take your comments personally and resist dealing with you at all,” says Davis, a longtime real estate broker.

This isn’t to say that you and your home inspector shouldn’t be forthright in itemizing corrections needed to bring the property up to standard. But do so in a manner that doesn’t offend the owners.

“Practice the art of being assertive without being annoying,” Davis says.

-- Launch your quest for a first home at a friendly lender’s office.

Eric Tyson, co-author of “Home Buying for Dummies,” notes that years after the Great Recession, most mortgage lenders are still stringent in their requirements of borrowers. That means all home loan applicants continue to face significant scrutiny.

“Count on your lender looking closely at your credit history and asking lots of questions about your income and assets. This is particularly likely if you’re self-employed or work on commission,” Tyson says.

By seeing a mortgage lender early, you have time to get mortgage pre-approval, which will give you a realistic sense of how much you can afford. A pre-approval letter is also a strong bargaining chip.

“The most important reason for mortgage pre-approval is to get your lender’s blessing that you’re qualified for a loan. This makes you a lot more credible with your sellers,” he says.

-- Stay positive about your push for homeownership.

Will 2018 represent a gradual shift toward more of a buyer’s market? No one knows for sure. In most areas, property values continue to rise, though there are an increasing number of exceptions to this rule. But the new Trulia report offers some hints for better times ahead for buyers. Chacon notes than half of home sellers in the 100 largest U.S. metro areas took price reductions during the year ended this October, which could foretell more price cuts throughout next year.

Early says buyer confidence remains strong among those in the millennial generation, whose earnings are gradually rising.

“Many millennials are late bloomers in their early 30s who are just now settling down and getting married. They’re chomping at the bit to finally buy a house of their own,” he says.

(To contact Ellen James Martin, email her at ellenjamesmartin@gmail.com.)

More like Smart Moves