Do Buyers Need to Settle…?

How many homes should a buyer see before choosing one to offer on? This article seems to suggest no more than 8. I have found that I agree with this wisdom at some level. I observe in my own life that if I see about 10 homes that I am interested in, then I am usually at the point where I will make an offer. There’s no science to it, it’s just that with each home shown there is another check-off on the list of possibles and a realization of where the market is and what is priced appropriately. 

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The contradiction is that one of our principles is to never pressure-sell anything. Not to hard sell. Not to encourage people to do anything uncomfortable. So, I have shown buyers 60+ homes over periods of 9-12 months. This is the contradiction I must live in if I want to get people the "right " home. I digress...

Sonora Real Estate is a market that is extremely limited at any point in time. Sometimes we we’ll have a plethora of downtown Craftsman’s available…but that means only like 3-5…not 25. In the Tuolumne County market (where inventory is low), you are lucky to have 1 of any style on the market in a given area.

The second problem with Sonora (or more broadly Tuolumne County) is what I would call "Areas". Many buyers I have worked with are searching for a hyper-specific area. They usually want “Downtown” or “Curtis Creek”. The upshot of this, is that often times they are not stuck on the style of the house, rather as the maxim goes…location…location…location. These types of buyers are all about location. However, these hyper-specific "area" markets are limited. At any point in time downtown Sonora area will have about 3-7 listings and Curtis Creek will have 2-3- or maybe none! That is not a lot of homes to choose from.

Then comes the pricing issues. Sonora pricing sometimes get’s a little out of hand. $325 per sqft?…not in Sonora!!!!! It seems to my buddy Jim Hildreth that at any point in time there are about half the listings on the MLS that are overpriced. I am not sure it is that high, but it can be a significant portion of the listings. The famous line from a seller is that they are "testing the market". This means that out of the 2-3 homes you have in Curtis Creek, there might be 1-2 that are overpriced and will never sell...bummer for someone who wants that area.

So, the downside is that you write offers that seem reasonable and yet are not because the owner and the agent have listed so high. It truly can be frustrating work. 

Anyways, there it is. Maybe as Mick Jagger says...You Can't always get what you want...

http://www.realtor.com/advice/buy/when-should-you-settle/

Buyers...Buyers...Buyers...

I work with a lot of them myself. If I could get everyone of them to at least consider the following 5 "thoughts" it would save a lot of time. So, let's get into it. What should a buyer consider when starting the search for a home?

1) Financing

Buying a house cannot happen without this being lined up first. Cash (your own or a loan) is the oxygen in a transaction and this is what every realtor worth their salt will tell you to shore-up first. Make sure there is a lender that pre-approves you and that any money you plan on using for a down payment or the transaction is in an account with your name. Also, it is EXPENSIVE TO BUY A HOME...many times You need to plan for closing costs, lender fees, and this is in addition to any downpayment you are considering.

2) Length of Stay

As a general rule I think that every homeowner should plan to live in the home they're buying for at least 5 years. Especially if you are only putting 0-3.5% down (FHA and USDA loans). The reason for this is that a lot of people believe that their house is their single biggest investment. As with any investment, the best rule of thumb is to buy and hold...an investment this big needs time to go up enough in price/pay down the loan. One thing a buyer doesn't often consider, is that when they go to sell a house it will be expensive. So, unless you get the "deal of the century", it is probably best to expect that the house will start paying you back after about 5 years. In a market like Sonora the housing move slowly in price (relative to large cities or HOT areas). Time is generally on your side.

3) Down Payment

Figure out up front what you want to put down. Is the number 0%, 3.5%, 20%, 40%? This matters, because you have to have the money plus some closing costs and once you are in contract you need to know where all this money is coming from. For example, if you are borrowing $10k from parents or an uncle, that needs to be known. Also, as mentioned above there will be more costs. Yes, it costs money to buy a house:)  

4) Wants vs. Needs

I've noticed that as most great home searches begin, most people looking for a new home have a list of things they WANT, but this is quite different than what they NEED. The problem here is that a realtor can usually find everything that a buyer NEEDS within their price point. The problem is often trying to find everything they WANT within their price point. This is especially tricky in a small town with very limited inventory.

If you, as a buyer, can determine these differences early, it will be easy to give up some things that may not be available at your price point, or maybe don't even exist in the area you want to buy. An example might be someone who wants a huge yard but wants to live in downtown Sonora. Most homes there have no (or very little) yard because most homes are built on hills or small lots. 

5) Location

Yes...it matters. Consider everything, from re-sale potential to schools. You don't want to live in Pinecrest if you have kids going to Sonora High. You probably don't want to live in Jamestown if your kids are going to Summerville High (or you want them to). Also, proximity to job...that can be a big deal.

Location...Location...Location. A lot of buyers I know have grabbed a great deal only to realize the location is a real problem in the end because of the neighbors, traffic, lot, amenities, etc. Please be aware of EVERYTHING that you can and go into a purchase with eyes wide open. Too many times there is compromise on location for something like countertops. Not a great idea overall.

Tuolumne county is spread out- so location can be critical. Even I as a realtor did not think about location enough wen we purchased our new house. Moral of the story? My wife and I realized we like East Sonora better!

The moral of the story is be a buyer, but be informed. I hope this helps in your search for the perfect home in Sonora. Thanks for reading.