Each homebuying pursuit begins with a dream—and more often than not, that dream very quickly turns into fantasy. Homebuyers and particularly first-time homebuyers have plans and visions of their dream property with all the bells and whistles, in flawless condition, in the perfect location and all for a bargain price.
In 2012 all of that might have been possible with a little luck and a prayer. Today's seller's market marks a different tone. In this market, the best defense against heartbreak and frustration is to put some of the HGTV dreams on hold in favor of reality.
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1. The dream home is going to have every amenity on the "desires" list.
Historically low inventory—a market reality that doesn't look to be changing anytime in the near future—is dictating a highly competitive marketplace. When that so-called perfect home hits the market, it is highly likely there will be multiple buyers waiting in the wings for that very same type of property.
2. There is plenty of time to secure the pre-approval after finding the home.
This couldn't be more of a fallacy! In a highly competitive market, not only are real estate professionals pressed for time, but so are mortgage professionals. Securing a pre-approval requires much more than the ability to fog a mirror and a phone call to a local lender.
3. There's no need for a real estate professional when a buyer has the internet.
While the internet is helpful in the initial search and to get an idea of what is available, it is no substitute for the market expertise, legal knowledge and guidance of a real estate professional. No matter what the internet says, there is no algorithm that can replace the human real estate professional.
4. The seller is going to fix any issue or imperfection that comes up.
Traditionally, in a neutral or buyer's market a seller may be more inclined to make repairs and even resolve some cosmetic issues. That is not the case today, especially when sellers have multiple offers or backup offers in place. Be realistic in expectations and a good rule of thumb is looking at structural, fire, life and safety issues.
5. The listing price is likely what you will pay.
With the prevalence of bidding wars in the last several years, particularly in hot-spot locations and limited inventory, the listing price can be considered more of a guideline. As the market and demand climbs, the unfortunate reality for buyers is that paying the listing price will likely not result in an accepted offer.
6. Can't find the house? Building oneself is just as easy.
Land is also running at a premium in this market, as are materials, contractors and sub-contractors, as well as architects, engineers, permitting and system development charges. Building exactly what one wants on that perfect piece of land is a lovely idea. That said, it's generally out of reach for the vast majority of buyers.