All this spring, a couple in their mid-30s struggled to buy their first home. They were exasperated with their landlord and eager to move to a handpicked neighborhood where their boys, 10 and 11, could attend top-ranked schools. Yet due to COVID-19, the spring market proved a bust for this young family.
“In five multiple bidding situations, they lost out to other buyers. They were extremely disillusioned,” recalls Neil Corkery, the buyer’s agent who assisted the couple.
As it worked out, this true tale had a happy ending. Through quick action a few days ago, these buyers were finally able to secure a property. They did that with a full-price offer on a diminutive gray rancher with three bedrooms and an attached one-car garage.
This is an acutely frustrating time for many buyers. It’s also a puzzling period for first-timers who wonder why, in the midst of a recession, the housing market remains highly competitive in many areas.
“The problem is, lots of buyers are now rushing forward because they believe mortgage rates are the lowest they’ll see in their lifetimes. The other issue is there’s a serious shortage of available houses, because many potential sellers don’t want buyers trooping through their property until COVID is over,” Corkery says.
In reality, of course, some would-be buyers are also waiting on the sidelines until there’s greater certainty about the direction of the overall real estate market. And economists say this position also has validity.
For example, at Moody’s Analytics, the financial services firm, chief economist Mark Zandi is forecasting a “cooling off” of home price appreciation later this year due to macroeconomic pressures.
Here are a few pointers for buyers:
-- Keep your emotions under control when shaping a bid.
Joan McLellan Tayler, who owned a realty firm for 15 years, says would-be buyers who in the past have lost houses to other bidders are sometimes prone to rush into a deal they might later regret.
“Without quick action, they fear they’ll be shut out of the market altogether,” says Tayler, the author of several real estate books.
Granted, buying a home is currently a competitive activity in many neighborhoods. But, she says, every property should be evaluated on its merits, not on the number of people vying to own it.
Eric Tyson, a personal finance expert and co-author of “Home Buying for Dummies,” suggests buyers set a ceiling on how much they’re willing to pay for a property before making an opening bid. This is especially important if one partner in a couple is likely to get carried away with a “must have” house.
-- Research neighborhoods through local residents.
Your agent should be helpful in sorting through property listings, making sure you identify the most promising homes available.
But once you have your eye on a particular place, it could be the time to talk to those who know the community best: residents.
“Believe me, most neighbors will bend your ear about their neighborhood. For example, they’ll tell you if they like or hate the local schools and the ages of kids who live in nearby homes,” Tyson says.
-- Educate yourself on local property values.
If you’re uneasy about the price tag attached to a property you like, have your real estate agent show you several comparable homes that are also on the market, including those “under contract,” Tyson says.
Resourceful buyers might even go a step further by asking people who’ve recently bought into the neighborhood whether they would mind giving them a peek inside.
“Drop a little note in their mailbox telling them you’re interested in the neighborhood, and leave your names and phone number in case they’ll let you come by,” Tyson says.
What’s the advantage of evaluating the price and quality of freshly sold homes? In areas where home prices are rising, the latest sales are the most telling, more so than transactions that occurred months ago, he says.
-- Visit enough properties to make an informed comparison.
Even if the first place you see looks perfect, you’ll want to ponder alternatives to make sure you have a basis of comparison, says Tyson, who recommends that home shoppers look at a minimum of six properties before they buy.
Due to COVID-19, many more sellers are now offering virtual tours, or you can go inside properties with the proper protective gear, including masks and gloves.
“Buyer’s remorse is much less likely if you’ve examined several options, even if you must do so in a single day,” Tyson says.
(To contact Ellen James Martin, email her at firstname.lastname@example.org.)