Get Smart! The 11 Realities of Homebuying in 2011

March 3, 2011

After twice being snowed out, my colleagues Bill Aibel, Natasha Burger and I were finally able to hold our homebuying workshop last night — we had a great turnout and very interactive session. We’ll likely be holding a similar workshop again in late summer or fall, but in the meantime, if you missed it and are interested, here’s the framework of the session — please get in touch if you have questions on any of these points.

The 11 Realities of Homebuying in 2011

REALITY #1 — National housing news does not apply to Cambridge and Somerville:

  • Properties values have stayed strong.
  • Foreclosures and other “bargains” are rare.
  • Appropriately-priced homes move fast and generally sell close to, at, or even over asking price.

REALITY #2 — But even here, the “boom” years are over—appreciation is slower than it used to be, so consider the reasons you’re buying, the tax benefits, and how long you plan to hold onto your new home to determine whether it makes sense for you to buy now.

REALITY #3 — Qualifying for a mortgage is not as easy as it used to be, but it’s still possible and rates are great. The key is to get your finances in order and get pre-approved.

REALITY #4 — The Internet is a great tool for researching the market, but it doesn’t give you the full picture:

  • Listing information, Zillow and even public records are not always accurate.
  • A home’s assessed value ≠ market value ≠ appraised value.

Homes can’t always be compared quantitatively. Our housing stock varies a lot, so it’s hard to compare apples to apples—don’t depend on price per square foot!

REALITY #5 — Securing your dream home may take some time: the average buyer spends 12 weeks actively looking at homes. You may also make several offers before one gets accepted, and then you’ve got another 45-60 days to complete the transaction.

REALITY #6 — Single-families, multi-families and condos each have a different set of considerations for buyers.

REALITY #7 — Condos are complicated, part 1—Financing:

  • There are Fannie/Freddie requirements for owner occupancy and caps on commercial space and the number of units owned by one entity.
  • PMI has even more requirements: budget, reserves, etc.
  • Buying into a new condo association often requires portfolio financing.

REALITY #8 — Condos are complicated, part 2—Associations:

  • You will be sharing ownership of your home with others in the association.
  • Due diligence requires having an attorney review condo docs and financials, and talking through issues/concerns with a local agent experienced with condos.

REALITY #9 — In a competitive bid situation, the winner is not necessarily the highest bidder—downpayments, pre-approvals and dates and contingencies matter.

REALITY #10 — No home is perfect—every home has its issues, and most sellers will not renegotiate price based on things that come up in an inspection. Home inspections are for “game changer” issues.

REALITY #11 — Real estate is seasonal and inventory is especially tight in the dead of winter, but more properties will be coming on the market soon and so the buyers will be out in force.

In the spring market, there won’t be much time for deliberation, so you need to be ready to move when you find your dream home. Now is the time to determine your goals and criteria, do your research, get pre-approved for a mortgage and line up your team of professionals.

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