Why a Realtor Buying a Home Brings Business Practice into Question
Familiarity can breed discontent. Being comfortable is a notion we all aspire to—until its presence compromises personal drive. Unless a desire to shift from the everyday routine sets in, boredom is the mainstay.
“If it’s both terrifying and amazing, then you should definitely pursue it.” - Erada
Success comes from venturing outside the ordinary and into the unknown. Making a move in real estate may serve as a panacea against a mundane existence at a time in history that has us questioning who we are, what we do, and our collective purpose.
The real estate market numbers continue to dictate our need for repositioning.
Why a Realtor Would Buy a Home Now
From an investment perspective, buying property low is the ideal time. With Gilbert, Scottsdale, Phoenix, Chandler and other cities in Maricopa County realizing upwards of 25 percent value increases year-to-year, no one in their right mind would tout that it was a good time to buy.
If today defines the height of the market, sitting on the sidelines of purchasing would be wise. But this isn’t the year 2008, not by a long shot. Some industry experts and renowned forecasters expect mid-2021 through 2022 to continue the increase from roughly 20 percent to 25 percent.
Holding off on buying a home this year is omitting an opportunity to add equity to your personal portfolio.
Supply, Demand, and Shortage of Materials
Because Arizona continues to experience massive population increases from relocation, both rental and owner-occupancy property availability sits in extensive short supply. Even if demand begins to slow, we are so far behind the eight ball that a balanced market between buyers and sellers is in the distance.
New construction cannot keep up with the need as materials like lumber, steel, and contractors are limited. Vacant land in the metro area is hard to come by, forcing developers and buyers to more outlying areas for brand new homes. Completion dates given are 10 to 12 months from initial purchase contract, with final delivery dates often pushed beyond that. Buyers, sellers, and industry professionals’ patience are tested.
Home Purchase Risk and Reward
As a Realtor, the amount of times I wish I was a soothsayer who could foresee the ups and downs of the market are immeasurable. Oh, how I could make my clients wealthy with that talent! Instead, I defer to knowledge, intuition, and a healthy dose of common sense (Yes that does still exist.)
Making a solid real estate decision also requires a well thought analysis as to why buying a home is a desire coupled with a realistic ideology about expectations.
There are many reasons why real estate brokers require buyers to review and sign the Market Conditions Advisory document. There are no guarantees in real estate. We don’t know when the height of the market will be reached, nor when the correction, if any, begins and ends.
That being said, as a Realtor, I am amidst the purchase of a home. The following is the caveat I use for myself during this crazed market and advise my clients do the same: Would you still want to buy the home if the value increases stopped?
Wait. What? Yes. Ask yourself that very question before you submit an offer. If real estate values slowed or stopped, would you still want to live in the home you are purchasing? Take that long, hard, pause. Own it, to help mitigate regret.
If the new property is where you want to be, proceed. If a value increase happens, then there’s a bonus. A residential real estate purchase is a lifestyle choice with an investment component. Lead your decision-making with the lifestyle choice. If you are buying a home solely as an investment, then measure your risk based on today’s market conditions and whether you are in for the long hold or a quick turn.
The Desire for Home Ownership Is Personal
People are rethinking their life choices, especially due to the pandemic. What makes a more challenging life easier, more enjoyable, and in closer proximity to family has fueled a national shift in population migration.
Humbling Experience for Realtor Buying a Home in 2021
Unexpected life lessons arise when the teacher becomes the student. And so it is when a seasoned Realtor is buying a home for herself.
A real estate agent holds the proverbial hand of clients as they go through the home buying process. Extolling the details of what to do, what to avoid, and what to expect throughout the home search, negotiations and escrow period, it is paramount to support and promote a seamless experience.
Even a seasoned real estate professional can have doubts. (We are human.) When it comes to our own home purchase, second-guessing the transaction often takes first place.
I Can’t Believe I’m Buying a House
Self-effacing doubt consumes. Ruminating thoughts invade day and night bringing lack of sleep, incessant planning, and overthinking. It’s exhausting. “Why did I think a home purchase was a good idea?”
For the properties with added appeal, buyers are thrown into ill-advised negotiation points such as multiple offers, escalation clauses, and the removal of standard buyer contingencies including inspections and appraisal.
The current real estate environment puts buyer remorse on steroids. Not everyone can stomach it.
Real Estate Contract Has Buyer Safeguards
Even if your offer includes the waiving of inspections, this does not mean you cannot do your due diligence and hire third parties to inspect the property. A buyer has every right to know what they are buying. By waiving the inspections, the property sale is a true AS-IS transaction; the seller will not entertain providing the buyer with any pre-closing repairs or buyer credit.
In the event that a buyer removes the appraisal contingency, the ownness to complete the transaction at the agreed upon contract price falls on the buyer. Be afraid.
If an appraiser completes a report that gives a property a value of $480,000 and the contract price is $500,000, there is a $20,000 shortfall in value. The bank/lender will not provide the buyer a loan for more than the property is worth. This leaves the buyer having to come in with the extra $20,000 in cash, or to rework the loan and cash-to-close amount. Many buyers do not have that extra cash in hand.
Without maintaining the buyer contingencies in place, risk increases. At every contingency phase of the escrow, a tiny voice is heard underneath it all. “Maybe I should bail…” In reality, the phrase is a replacement for “I’m afraid.”
Buyer remorse happens, seemingly at record levels since 2020, a naturally occurring feeling not necessarily equating to negative aspects of a home purchase. Buyer remorse is akin to conflict or resistant emotions about letting go of the past.
What triggers buyer remorse can include:
Unrealistic expectations
Unforeseen repairs or property condition
Lack of neighborhood awareness
Minimal understanding of costs to come
Emotional insecurities about life change
Pending/new divorce or severed relationship
New job or promotion
Relocation
Upsizing or downsizing
Overall self-doubt
Previous negative home buying/ownership experience
Change, in general, can trigger negative responses—in every market. Unfortunately, the Phoenix area remains a Sellers’ paradise.
Embrace the Self-Discovery in Home Buying
In those moments of self-doubt, accept and honor the discontent. Think through why it exists and ask yourself, “Why am I afraid?” Share your thoughts with your Realtor to learn whether they are from an emotional perspective or a tangible concern.
In addition to being a buyer’s real estate representative, your Agent is also your confidant there to guide you towards a successful transfer of sale. Ask questions.
Request Multiple Walkthroughs
Nothing can compare to hands-on experience. Research shows that people gain and retain information best when tangible learning is involved.
Purchasing a home is no different. In fact, the more a buyer is able to go through the property on site (not virtual), a better ability to connect with the home ensues. The way the light of day changes the color of interior walls. How a wall in the living room gently curves, though aesthetically pleasing, may affect the placement of your coveted couch.
These may seem inconsequential but knowing them, and other intricacies of the property, not only helps build the buyer’s relationship with the property, they assist in alleviating fear about what’s to come—the closing.
Celebrate Your New Start
The difficulties in securing a home purchase provide unique opportunities. The process allows buyers to build better relationships with their Realtor. In turn, a Realtor can better understand buyers’ trigger points, not by what they are told but by the ongoing experience in working together.
Be afraid and appreciate the process. It’s how we evolve concurrently.