My wife and I are on both ends of the real estate business. We have a house in Ohio that we've been trying to sell for over nine months now and we're also looking at buying a house in Wisconsin, in the Madison area. Here are some of my observations in no particular order:
Posted on 07/28/03
- The market is hot for both buyers and sellers, but it can still bite both in unexpected ways. We're selling a house in Canton, Ohio that has been dropped to $99,900. It's a nice 3 bedroom, nothing special. It's about 5 minutes from the Pro Football HOF — a good area. You pay lower city taxes and get the better suburban schools. It's not selling. Why? There are brand new houses selling in the $150,000 range offering 4% financing for 45 years. Yes, 45 years! These new house deals are killing that market right now. That's how the seller is getting burnt. On the other hand, buyers are paying more for houses on a whole. In the Madison suburbs, a house that was $120,000 two years ago is now selling for $150,000. Has that house's value really risen about 25% in two years? Probably not, but lower interest rates are sending out more buyers and the sellers know that. If a seller can get away with raising the price by 10-30% because the low rates make the monthly payment still within most buyers' budgets, then they're doing it. That's how the buyer can get burnt in this real estate market right now.
- Realtor.com is a very powerful site with all the houses in the MLS. You can search houses based on a variety of criteria. Unfortunately, the details on the houses on the site are often sparse. Worse yet, they're often incorrect. I suggest real estate agents bone up on digital photography a bit more and take five more minutes to type in more (correct) details on the house. Also, don't put up a picture of a house where there are objects obstructing the view. A car parked in front of the house blocking part of the view is not helping that house sell. Just a thought there.
- The power buyers have today with the Internet is unbelievable. You can get pre-approved for a mortgage within minutes. You can shop for the best loan by spending a few hours filling out some applications and letting banks bid on your business. Searching for a house is great through the variety of sites out there. The Internet is drastically changing the real estate market.
- The power sellers have today with the Internet is unbelievable. You can sell your house yourself, save thousands of dollars and still have much of the same marketing resources as real estate agents have. For sale by owner is becoming even more popular these days and the Internet plays a big part in that.
- The need to have a buyer's agent is insane. It's just another sign that our society is plagued by litigation bug. The realtors have scared the common seller and buyer into believing that the real estate waters are much too choppy for mere mortals to sail alone in.
- A house may be a horrible investment. Don't believe the common wisdom that is always better to buy than to rent. We bought our home in Ohio and then moved four months later in 1999. We've been playing the landlord role for about 3 years and now we're trying to sell the house. We may very well lose money on the whole deal. Also, remember that in the early years of your mortgage you're paying very little on the principal, most goes to interest. Carefully examine whether you should rent or buy. There can be substantial expenses associated with being a homeowner that just aren't there when you're renting. Stuff breaks and some stuff on houses can be very expensive to fix if it breaks, especially if you're like me and don't get into the whole DIY thing.
- Buying a house is exciting, but don't think it's going to make you happy. That's just a reminder there for me.
- Category: General
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Thank you for writing this article called random thoughts on the real estate biz. This article really spoke to me. My husband and I are looking to buy a condo or single family in the high-priced market surrounding Chicago--Des Plaines, IL, etc. I am very confused and anxious about the whole process and I feel very uncomfortable working with real estate agents. The home buying process is making me sick! There's some things about renting I will miss. I cannot figure out whether to wait prices plateau or bid on a property now. Thank you for the reminder that buying a house will not necessarily bring happiness.
Thanks for the encouraging words Sharon. It's a strange and wild journey buying a home. Best wishes with your hunt!
Whisper (The Colonel is listening)...