Inside Real Estate News by John Rebchook
A monthly conversation with John Rebchook, Editor of InsideRealEstateNews.com and former Editor of the Rocky Mountain News, and Lane Hornung, President of 8z Real Estate.
It’s not easy being a buyer in today’s Front Range housing market.
The supply of unsold homes is at a 12-year low and demand is up more than 20 percent from a year ago.
By some estimates, for homes below $300,000 – $400,000 or more in some trendy areas – there are three buyers for each home.
While it is possible that the supply of homes could suddenly skyrocket, it has only done that once from May to June since 1990.
But if you think being a buyer is a tough job, imagine how hard it is to be a casual buyer.
That is the jumping off point for this month’s conversation between Lane Hornung, CEO and founder of 8z Real Estate and COhomefinder.com.
John: Lane, if over beer and brats a neighbor tells me he is going to casually go house-hunting in today’s market, would it be OK for me to chuckle?
Lane: I think it would perfectly understandable to crack a smile. Buying a home in the today’s market is a serious business.
John: It’s obviously changed from just a few years ago, when there was a glut of homes on the market, hasn’t it?
Lane: I think even seasoned Realtors, who have weathered many different real estate cycles, have been taken by surprise how quickly the market has changed from one where there seemed to be an endless supply of homes to one where there is a huge shortage – depending on the price range and neighborhood, of course. For a long time, there was no need to have a sense of urgency among people who wanted to buy a home. In those days, you could be more of a casual house hunter. You might not have found a home, but there would always be more to consider, or the one or two homes you were considering would still be available next week, or next month for that matter, so you could take your time.
John: So what does it take to successfully buy a home under today’s existing condition?
Lane: I think a buyer, much like a Realtor, has to have a laser-like focus. As I said before, I have found that it helps to write down what you want in a home. That’s not to say you can’t change it, but it seems to give you an outline, a guide, if you will, of what you are looking for in a home. And, of course, you should be pre-qualified by a lender, so you have a realistic idea of what you can afford.
John: It seems that in this market, communicating with your Realtor has never been more important.
Lane: That is correct. If your Realtor finds a new listing on a Wednesday, it might be too late if you decide to look at it on the weekend. I know that 8z REALTORs are running hot sheets 3 or 4 times a day to make sure that they are on top of any new listing as it hits the market. Hours matter. Even with that, many brokers are working with buyers who simply can’t find a home to purchase due to the tight inventory or they have lost out multiple times in multiple offer situations. In order to rustle some more inventory, brokers are calling homeowners who couldn’t sell their home a year ago to ask if they would reconsider selling it or mailing letters. Many sellers are surprised to learn that their home value has increased.
John: Should a prospective buyer feel pressured by the market to buy a home that he or she really doesn’t want?
Lane: Absolutely not. For one thing, it is a big investment. In most cases, a buyer will need to own the home for several years before they are likely able to sell it for a profit, after all of their expenses. There are exceptions to that, but if at all possible, from a dollars-and-cents point of view, they should look at buying a home as a longer-term investment, not as a way to make a quick buck. Of course, even more important than the financial aspect, they are buying a home, a place to live, so they need to get it right. That is why it is critical that buyers work closely with their agent to get very clear about what they are looking for in a home. This clarity allows buyers to move quickly and confidently when the right home comes along.
John: So how do they avoid buyer’s remorse?
Lane: That is where their Realtor can serve an important role. Buying a home is an emotional event under the best of circumstances and it is more stressful given current market conditions.
A good agent can be an objective sounding board and help you determine if this is the right home for you based on the criteria that you have defined.
And typically, there is another house out there that will meet your needs. It may not be on the market right now and you may have to wait a month or two, but it is very likely out there.
Trust me on this. I can’t tell you how many buyers I know who were upset and depressed when they lost a home, only to find one a week, or a month, or six months later that better met their needs.
John: Thanks, Lane.