Buying a Home this Summer? You’re Likely Doing It Wrong

When the average person may do five to eight real estate transactions in their life, we’ve helped thousands of buyers in the last almost two decades here in Flagstaff and my goal in this month’s column is to impart some wisdom to buyers so you’re not leaving your friends, family and real estate professionals slapping their foreheads in awe of your naïveté. Please know, I mean that in the nicest way – the principle applies to us all, you don’t know what you don’t know and you only get experience, with experience. Disclaimers aside, here are my top five home buyer mistakes.

Fail to Plan, Plan to Fail

Impulsive behavior seems to be increasingly prevalent in our “everything now” social and economic environment. I see this play out in real estate all too often. The impulse to maybe buy a house honestly hits most renters one to two months before their lease expires – for a few, that may be barely enough runway to buy, for most, not even close.

Even if you have a great credit score, some down payment and could buy, let’s project you want to own that home for five-plus years. Would you rather be patiently searching for the best option over a four-to-six-month period of time, or take what you can get in a 30-day rushed window?

This also works for move up buyers when timing a buy and a sale and even with second home buyers and investors. Give yourself time to make a plan and execute that plan, and your chances of optimal decisions and results will drastically increase.

Find the Loan Then the Home

U.S. real estate websites cumulatively get into the billions of visits per month – I know you’re peeking and dreaming about the new house far before you’re thinking, “Can I afford that?” Again, it’s human nature. It’s very rare that I actually find a client who has viewed zero online listings and is building a purely finance-first home purchase strategy.

I get that you want to see the finish line before you start the race but statistics show you will be much more efficient and competitive as a buyer if you’ve dialed in your financing plan before you get serious on the house hunt. How the loan fits in your life and empowers your financial future vs. burden is key for this to be a massive steppingstone in your life. Sure, click online a little but consult with a mortgage professional who can talk through your big picture plan and then get out next Saturday to the open houses, not the other way around.

The Husband’s Brother’s Sister’s Cousin’s Uncle

I completely get that they don’t teach this at school, so it’s natural to look to several avenues to try to find resources in how you should go about your options and how to quantify a “good deal.” The National Association of Realtors studies show that approximately 60% of buyers work with realtors that they either directly already know or were referred to by a friend. That’s where the “Hey, my husband’s brother’s sister’s cousin’s uncle is a realtor. You should use them,” is my common joke. I believe that’s based on most folks just trying to find someone they can trust.

I have two simple points here: First, you should do your due diligence on the professionals referred to you and not feel uncomfortable more or less interviewing them for the job. I’ve seen two similarly qualified buyers have two drastically different results – one owning and the other moving towns – just because the one that owns had a top-notch realtor that made things happen and the one that moved out of town got frustrated at the experience with the sub-par representation. Not all professionals are created equal.

The minor second point here is: Be paced with well-intended but non-expert family advice. I’ve seen a proactive parent grenade a great deal for their first-time home buyer kids all because they didn’t understand the dynamics of the Flagstaff market and were imposing beliefs from a distant market and likely another time (when they bought) – a truly tragic dramatic irony on that one!

Understanding the Market

Assuming you are then working with an expert loan officer and an expert realtor, I believe you should work to independently understand the rapidly changing dynamics of the local real estate market. How are the mortgage rates trending, how is that impacting other buyer demand? How is that demand shifting and how is that impacting sellers? How is the big picture economy impacting the current market? How is the local seasonality and economy impacting the market?

Last year, we saw so much whip-saw in buyer and seller sentiment it was almost like watching that movie where the parent thinks they’re cool trying to dress and talk like their teenagers. We’d see sellers pricing to a strategy that was “so last month” and their lack of current awareness is both comical and painful. Understand the trends and how you can effectively maneuver your negotiations through them.

Don’t Fall Victim to Over-Analysis Paralysis

All right! We’re looking good, we’ve made a plan, built a financial strategy, connected with an expert realtor and are getting the hang of this house hunt thing – now what? SLAM ON THE BRAKES because none of these homes are lining up with my Pinterest board or I’m overthinking how to make the commute for little Jimmy’s school depending on whether in 10 years he decides to go to public or charter school, etc., etc., etc.

I can fully appreciate really thinking through big decisions, but I do see a fair amount of buyers getting to this point and then falling apart because I believe they’re setting too high a bar for “perfect.” In my experience, there is no perfect home. That doesn’t mean you should carelessly offer on the next listing that your agent sends you, but rather, don’t fall victim to the over analysis and unrealistic expectations. There’s value to owning a home, even if it may actually be smaller or “less nice” than the ones your parents lived in. That probably wasn’t their first home either! FBN

By Chris Hallows

For additional information or to schedule an appointment, visit ChrisHallows.Benchmark.us or call 928-707-8572. The Flagstaff location is 824 W Rte 66 Suite A-3.

Chris Hallows is the Branch Manager & Sr. Mortgage Advisor of Benchmark Mortgage Flagstaff.

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