Gosh, Should I Buy Now or...
Posted by Super Admin on Friday, February 13th, 2009 at 10:38am.It’s the classic question we’ve encountered in recent years, but mostly these past several months. It’s the human nature aspect of group mentality…a paradox that will forever exist and which causes many real estate agents to become psychologists for their clients rather than home buying and home selling experts.
What do I mean by paradox? Well, consider the stock market in 2000 when stock prices were sky-rocketing and the values were not justified by the technicals. It was clearly a situation where the bubble was bound to pop any day. But rather than sell, or, better yet, not buy at these inflated prices, folks continued to buy as to not ‘miss out on the upside.’ It was the classic goal of trying to time the top. It was even difficult to convince people to sell half of their position to at least realize some profit. The majority would not do this and we saw the result to millions of investors trying to time something that cannot be timed.
Did we see the same thing in the housing market in the latter part of 2005? How many kept buying thinking the values had to continue as ‘times were good.’ It was easier for some of us to see…I conducted hundreds of settlements for buyers that had awful loans that were sure to come back and bite them; a 100% financed loan with a negative amortization schedule after 1 month for a buyer with a low paying job and credit score was clearly a future default in the making.
So what separates the financially successful from those who participate in this group mentality that says ‘wait’ when one should buy, or ‘buy’ when one should wait? The answer is that the former realize that they can never sell at the peak or buy at the bottom, but if they pay attention and buy when conditions favor buyers they will always do well over time.
Folks, it’s a buyers market. Home values are down, inventory is up, rates are low…and as an additional bonus, other buyers qualified to buy now are waiting because of what I’ve been talking about in this article.
The only thing left to do for those ready to take advantage of good value is team with an professional agent. Look for these traits when seeking a partnership with an agent:
1.) He/She must be your local economist of choice. He must be able to give real data that counters the constant negativity of the media that is in many cases poorly informed. I personally am a real estate agent in teh Fairfax area, serving there and Arlington, Prince William and Loudoun counties. I must be able to convey how this industry is cyclical and what goes down will come back up. Couple this with realistic expectations that the days of expecting a financial windfall from your home by buying and selling every few years isn’t going to happen again. Owning a home is a great investment through modest appreciation plus debt paydown.
2.) Your agent must understand why you are buying. Whether it’s retiring, getting married, divorced, job relocation; your agent’s ability to understand the reiterate this as you view homes help keep the buyer centered in their decision making process. Buying a home is emotional, and buyers often come across the home that perfectly meets their ‘why’ but they’re reluctant to pull the trigger until I go over their ‘why’ again and they are able to see more clearly.
3.) Finally, a good agent can effectively help buyers get through the reluctance attached to a shifting market like we’re in now, thus the reason for my article above. If the atmosphere is wonderful for buyers, then buy. Once the market turns, it turns quick and suddenly sellers won’t pay closing costs, you are now competing with other buyers on your dream property, and suddenly it’s no longer a buyer’s market.
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