Buying a home on the post-recession market
If you're looking for a new home in this post-recession market, you need to hire… a psychologist? That's exactly what ERA Real Estate did, and the info they got can help you just as much as it helps your real estate agent.
ERA Real Estate recently took a rather interesting approach to helping their agents sell more homes. They hired acclaimed clinical psychologist Leslie Reisner, Ph.D., a leading expert on behavioral change, to tell them how homebuyers' personalities affect the purchase process. The information they got is just as useful to the potential homebuyer. Here's what you need to know.
According to Reisner, "as our economy continues to recover, buyers are definitely on the move… Lifestyles have changed and, therefore, behaviors have changed." Reisner goes on to point out that it's important to understand your behaviors to get a grasp on what your homebuying priorities should be.
Be the broker's backup
Reisner identified a common behavior that she calls the "broker's backup." If you're not already, it's a good idea to learn to be this kind of buyer. This buyer is well researched and knowledgeable. Your home is the foundation of your life. It's just as important to know all you can about the neighborhood (how close it is to work, what the schools are like, what nearby amenities you commonly use) as it is to find a house with enough bathrooms to keep three tween girls from strangling each other in the morning.
Make a list of your needs, including the physical needs like number of bedrooms, bathrooms and things like how much kitchen space (including countertop and storage space) you realistically need.
But don't forget about the lifestyle you lead. Do you need to be in a good school district for the kids? What about extracurricular activities (yours and your kids)? If you're moving to or within a smaller town that doesn't have every amenity under the sun in every neighborhood, you should also consider things like dry cleaners and other services you need frequently.
Once you understand what you really want, decide what you can compromise on and what you can't. Make sure you get input from your agent because they really do know the market better than you do. And unless you need a house now, don't be afraid to make a lower offer and walk away if they don't take it.
Look to the future
Reisner found that there's an emerging trend of multiple generations living together, whether because of eroded personal wealth of Baby Boomers or a tight job market for younger professionals. It's important to think about how your future needs (even the possibility of an expanding family) could affect your needs in the long term.
ERA Real Estate CEO Charlie Young notes, "the all-in-the-family buyers are interesting because they are often looking toward the future and planning for family progression and growth." He says that buyers "should understand zoning laws if they are thinking about expanding or renovating in the future. If elderly family members are moving in, buyers may want to consider living space on the first floor for a time when stairs may become difficult to maneuver. Another key consideration is the availability of bathrooms or the possibility to expand the bathrooms should that be needed."
But it's not all about bedrooms. Young thinks it's also important to have enough common area and private space to accommodate everyone's lifestyle. So if Grampa's got a penchant for blasting Motley Crue, it's best for everyone if his room is on the other side of the house. It might be wise to spend a little more on a house that will stay with you into the future. You might even consider a split-level or duplex or a house that can accommodate an in-law suite.
Don't get caught up in cosmetics
While the study shows that most current homebuyers are willing to spend a bit more money on a ready-to-live-in home thanks to a recovering economy, don't get caught up in the minor details.
You don't want to purchase a home that has foundation issues, but if the home of your dreams has pink carpet and SpongeBob Squarepants-yellow walls (true story), those things can be fixed fairly easily, and the house may be much cheaper as a result if those detractors have made it difficult to sell.
Reisner says that buyers should look at a house like an open canvas. "When working with their agents," she advises, "[homebuyers] should adopt the mindset that a house can be personalized with just a few small changes… many people have a difficult time getting past paint color and forget how easily and cheaply it can be changed."
Though Charlie Young does note that move-in-ready homes are usually a priority for military families to maintain their lifestyle without investing a lot of sweat equity in a home they may have to sell in a few years.
And if you're looking for a foreclosure, beware. They can be great deals, but you need to understand the home's condition and the foreclosure process. It can be lengthy and repairs may be necessary, so if you need to move in immediately, a foreclosure may not be right for you.
Don't get supersized
It's one thing to succumb to the call of "would you like that supersized?" at Mickey-D's, but don't let it happen to your house unless you're purposely buying up. Charlie Young told us that a lot of people are downsizing to get through the harder financial times, to simplify retirement or even just to live a more eco-friendly (and cheaper) lifestyle.
If you're selling a home
If you're selling your home, whether by yourself or through an agent, remember these points, too. Young says to make sure you fix up your home a bit because dingy walls and bad carpet may lower buyer interest. Since so many photos are posted online, you may not even get a visit if it doesn't have what Young refers to as "online curb appeal."
You should paint your walls neutral colors because buyers really do have a hard time looking past that, and it's a shame to lose a potential buyer because they can't picture your home fitting their own tastes. It's also important that your house have curb appeal from the outside, so make sure it's got a fresh coat of paint and that the lawn is well maintained.
Bathroom and kitchen renovations could also pay off. A lot of renovations can be done for $10,000 or less, and you'll recoup your investment as a general rule.