When there has been enough of renting, it’s not uncommon for the home-buying hunt to begin. Most first-time buyers, however, don’t know what they don’t know. And if they are placing their well-earned dollars in a real estate investment they plan to live in; they need to become a student of the hunt.
Real estate professionals who specialize in first-time homebuyers will usually tell you that these consumers usually haven’t seen enough houses or condos to fully understand where real estate value lies, even if they’ve fallen in love with a few floor plans or features here and there. While they may have lived in their parents’ house much of their lives, it’s not the same as having taken care of it. What kind of teenager notices subtle signs of damage, sloppy construction, or poor maintenance? Maybe those who go on to become Realtors? The bottom line is that few novice homebuyers recognize value when they see it. RealtyTimes’ PJ Wade describes it in a recent article: “First-time-buyer naivety is often preyed on with the latest buzzwords, staging, hot shiny appliances, and a coat of fresh paint.”
If you’ve been a renter most of your adult life, it’s hard to know what has gone on with building materials, design, or lifestyle essentials, since what you rented is what you got — no more and no less. Wade points out how this leads to undervaluing or even over-over-valuing new houses or condominium units. “For example, quartz kitchen counters have gained popularity over marble and granite for several reasons,” says Wade. “Open-concept design is preferred by those with small children or those who live to entertain, but not by those who are untidy, relish quiet spaces, or are energy conscious.” Single story homes can appeal to the young and old alike, but many take up huge footprints on the property, robbing families of backyard space.
Wade points out how even first time sellers can have unrealistic notions of value, believing their cost of buying and transforming the property into their home suddenly adds up to their actual “bottom line” for resale value. “Problems arise for sellers when this must-have sale price is not in line with market value,” says Wade. “When the seller expects more than market value, this ‘over-priced listing’ may take longer to sell, may eventually sell for less, or may fail to find a buyer.” But make no mistake. Some buyers will fail to recognize when a home is over-priced unless they have a real estate professional along to point it out. Emotions can rule the day until reality hits when a bank appraiser comes in to give them the bad news — the house isn’t worth what they are willing to pay for it.
Even homebuyers who consider themselves “experienced” because they bought a home in which they raised their families and are now ready to downsize can fall prey to making poor decisions. Smaller and cheaper may sound good in theory, but once they experience the reality, they may have regrets.
“When faced with the actual move to a smaller house in a cheaper location, they may find the mental leap too great,” says Wade. “Downsizing is often wrongly considered merely moving into a smaller property. In reality, this less-space move usually involves adopting a different lifestyle, living in a different neighborhood, adjusting to a different status, dealing with different interior finishes, and the list can go on”
Unless you have a background in contracts, financing, interior design, renovation, negotiation, and conflict resolution, it’s best to enlist the help of a professional. What you don’t know about real estate can be monumental, and many Realtors consider it their job to educate you not only on what’s out there but also what to avoid. They make it their business to know what you don’t or even don’t WANT to know.
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