Tuesday, December 20, 2011 / by Nathan Clark
The buyers were a relatively young couple, looking to buy their first home together, although they owned a small condo the young man had purchased a few years ago. By the other agent’s account, they are excited to be spending the holidays in their first home. I believe that homeownership is still very much a part of the American dream, and hearing about this couple in their own home for the holidays reinforces it for me.
The agent told me something else that his clients shared with him: “They know that in a normal market, they probably wouldn’t have been able to swing it.”
They bought the home for about 15 percent less than what it had sold for in 2004, he said, but that purchase price included a nice chunk of change that the seller put toward their down payment and closing costs. Everybody ended up happy, but the truth is that without a motivated seller, they might not be enjoying this home for the holidays.
Motivated sellers, of course, are more plenty now than they were, say, four or five years ago – one factor in the current real estate climate that helped the buyers. Actually, another factor helped, too.
The agent told me that this particular home was in the same neighborhood as another home the buyers absolutely fell in love with. The first home, which they considered their dream home, was sold on the day they attempted to put their offer in. They were a little down about that, but when the agent showed them a similar home in the same neighborhood, they jumped on it and their offer was accepted.
They are glad they did, and the situation underscores another aspect of today’s market: With the inventory of homes for sale and the choices available to buyers, it’s not that difficult to find more than one that you love.
It made me think that in addition to affordable purchase prices and low interest rates, the number of quality properties on the market AND the number of motivated sellers can be counted as reasons buyers have it so good right now.
The deal also illustrates some negatives about the market.
The seller, as it turns out, came off his listing price AND agreed to many concessions, including leaving an expensive pool table and hot tub, because these particular buyers were prequalified, had some down payment money and steady incomes. In fact, the agent said these buyers were the only clients he was currently showing houses to who could qualify for this particular home.
Things got a little dicey, however, because despite having it on the market for months, the couple couldn’t sell that condo. Had the seller not been so flexible in the deal, they might not have qualified because of the mortgage on the unsold condo. As it turns out, they decided to rent it and have a signed lease that will provide some income until they do sell it.
That shows a few things about the current market. First, that there are probably more affordable, quality homes out their than there are qualified buyers, probably due to the banks’ stricter lending standards of today. And second, it shows that if you DO happen to be a qualified buyer, you’re practically golden.
But it also shows what sometimes becomes a snag – you had a motivated seller, very qualified buyers, but the purchase was touch-and-go for a while because the couple – considered “move-up” buyers – had a home they were having difficulty selling.
I like to point out that “move-up” buyers who feel like they are taking a loss on a house they sell for less than they paid can take some comfort in the fact that they are also likely buying MORE house for much less than they would have paid in the past. However, sometimes if the buyers’ current house can’t sell, the math just doesn’t work out.
Again, I am glad that this particular sale seemed to make for happier holidays for all parties involved. It does, however – in one deal – show you many of the factors affecting the current real estate climate.