Homebuying Disappointments
Buying a new home is very rewarding – the pride of ownership, and building wealth through real estate (e.g., equity), are two excellent reasons to buy. But there can be disappointments too, especially in this market.
As a first time home buyer, you should at least prepare yourself for the possibility of some of these issues, particularly if you are pursuing short sales, foreclosures and bank-owned properties (which may be most of what you are seeing in your price range).
Read also: Short sales, Foreclosures and Bank-owned Properties
1. The shattered dream – reality hits when you find that you cannot find, nor afford your dream home. And most, if not all, of the distressed properties are in really rough shape
2. Making what you believe to be a good offer and having it rejected. Just because it is a buyer market in many areas does not mean all offers will get accepted.
3. Making an offer on a short sale, foreclosure or REO and having to wait a long time for a response…or getting no response at all. Or getting beat out in the multiple offer bidding.
4. Learning about lots of problems in the home you want to buy during the home inspection – this is pretty common, and if you are buying a distressed home you can be sure there will be deferred maintenance and other issues to deal with.
5. Not qualifying for as much of a loan as you would like, or for a loan that will severely limit what you can buy. The financial realities of home buying can be a big source of frustration, especially with more stringent mortgage requirements, fees (PMI, HOA) and when living in expensive areas like Southern California.
Obviously other disappointments can occur, but these are pretty common, so don’t have unrealistic expectations. Many things can be overcome, and if you are realistic you will be less likely to feel so disappointed when the process does not go how you would like.
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If I can provide more information about Carlsbad and surrounding areas, or the housing market in general, or otherwise assist you in your homes search, please contact me by phone or text at (760) 840-1360
or email me at JDowler@remax.net.
All content copyright © 2007 Jeff Dowler Carlsbad Homes and Real Estate Tidbits
on April 14, 2008 on 1:40 pm
1. The shattered dream – reality hits when you find that you cannot find, nor afford your dream home. And most, if not all, of the distressed properties are in really rough shape
—
One thing that I learned is that just because you can’t live in your dream home in city A, having that dream home in city B doesn’t make it all right. It’s an interesting feeling that you learn AFTER you move into city B’s dream home.
You live and you learn.
But another disappointment that you didn’t mention is paying more rent than what you could be paying for your own home with today’s mortgage rates and dropping home prices.
-Ron
on April 14, 2008 on 3:30 pm
The people over at wonderland homes are great if you’re looking for a new home in Colorado. Give them a look see.
A great place for new homes in colorado.
on April 14, 2008 on 5:43 pm
Ron – well that is a good point. It really becomes a personal decision. My personal feeling is that you are better off sacrificing some things to be in the are you want, rather than moving to another city to get the house but perhaps not the community you are seeking. But that’s just me.
on April 14, 2008 on 5:45 pm
Editx – well I am going to allow this comment but it feels kinda spammish to me. You are using my site and my blog to generate traffic, etc to your site. Just doesn’t feel right to me. Hope you understand my perspective.
on April 14, 2008 on 5:52 pm
Jeff is right about not getting your hopes too high. I am looking to buy REO (Real Estate Owned -bank owned that is) properties. It can be very frustrating, but in the end I think I will get a great deal.
One problem with REOs is the sale is AS IS. This means that even if you find major problems with the property, you will not be able to negotiate repair credits like you can with a standard purchase.
Also you have to wade through the bureaucracy of dealing with a bank, which can take longer than a standard purchase. Normally an offer is written with one or two business days for the seller to accept or counter-offer, but if you do this with a bank you better count on the offer expiring.
For more information visit my forum at First Time Home Buyer Forum
on April 14, 2008 on 6:05 pm
Allan:
Thanks for your comments. I will say that in some cases the banks will negotiate certain repairs, at least the more significant ones, since they will come up against them, possibly with other buyers, if the first buyers back out. But it is certainly different than with typical sales, and sometimes the homes are in much worse shape – missing appliances, fixtures, etc. A home inspection is ESSENTIAL for home buyers in these cases so they know what they are buying. I often advise these buyers to have contractors in as well to give them estimates of repair costs.
The timing, as you say, can be frustrating. They can take weeks to respond even in the case of multiple offers. It is very frustrating for all parties concerned,
Jeff
on July 8, 2008 on 1:53 pm
Great article. Thanks for posting.
I’ve been renting in OC California since 2005 (sf home) and I’m very disappointed in the housing market here in that home sale prices are completely out of alignment with real incomes here. I like southern Cal, make great money, have excellent credit, have cash in the bank, no debt, but still can’ t make the cashflow work month-to-month because to own a sf home you need to be able to have at least $3000 you can part with monthly with ease in a mortgage (avoiding the junk loans).
How can people do live out here being leveraged to the hilt? And have an SUV car payment and a second card payment? And supposedly credit card debt on top of it all. And maybe even a lovely HELOC to buy the new granite kitchen countertops? Either everyone in OC is earning $200k per year gross (which can’t be the case) or something is fundamentally wrong in this part of the country.
The answer is that Californians are living way, way beyond their means and unless mother gov comes along and forgives everyone’s debts, the negative savings rate just cannot be sustained.
I’m hopeful to see the market start to correct, but to be honest, we have a way to go before home prices for sf homes reach anything resembling affordability, if ever. I still have serious doubts about OC housing market and I’m not alone.
on July 14, 2008 on 7:21 am
Mark:
I can understand your frustration – I know a number of people who feel the same way. Affordability in CA is a huge issue and while there has been some progress with the changes in the market prices, it is still not an easy place to buy, and it is not likely to change much.
There are some good loan programs out there, and a buyer also has to take into account the ability to grow equity over time and build wealth through homeownership (can’t do that while renting) as well as the tax advantages of mortgage interest and property tax deductions. And there is something about owning a home rather than renting one.
If you can afford the monthly payments it makes sense for many to get into a home, even if it is not the dream home. In the long terms real estate is always a good investment.
Thanks for your thoughts.
Jeff