I was talking to a client that had moved out of the country about 10 years ago for work related reasons and is now coming back home.
He is still living abroad and does not want to come back and have to live in a rental place. So how do you help someone buy a home while they are living in a different continent? I know in today’s world and thanks to the advance s in technology , this is not only possible but common. It happens all the time. The world is shrinking and distances are becoming just a geographical situation that is easy to overcome.
I did not have the opportunity to sit down face to face with my client but I realized from the first conversation that although he had previously owned properties in the US, not only the market but the process itself had shifted so much that it warranted an explanation of the home buying process from scratch. One of the things that I know amazes many people buying a home after years of not having gone thru this process is the amount of paperwork involved, so I decided to send him a sample of what he would need to be signing when the right home came along and he was ready to make an offer.
I was not mistaken…when he received it, he was absolutely shocked. He said “Is this something YOU require your clients to do or is it the standard to put clients thru twenty something pages of legal speech? The last time I bought a house we made an offer by phone and the contract consisted of 1 page with carbon copy…maybe 2”
That got me thinking, in how many other ways has the home buying process changed in recent years?
After thinking about this question for a while I realized that not only have the legal aspects of the process changed, but more recently I noticed that the emotional and psychological process has changed due in big part to the huge shifts that the market has suffered, and most buyers are caught off guard by the intense emotional process they experience.
From my recent experience , I have seen that buyers are getting caught in the middle of an uncertain time in the market, the general mindset is one of not knowing whether we are going up, down or staying flat. Have we hit the bottom? are we still going down? will it be a “W ” which means that although we are seeing some positive signs out there, this are only temporary and a breather before another downturn? What about that new wave of foreclosures expected to hit the market any day now? How is the high unemployment rate going to affect the Real Estate market in the short and long term?
I see it all the time, each one will have a different take on the situation but the mindset I am seeing is very similar. Buyers are looking for a “deal to end all deals” and I am not talking in this case about investors, that is a whole different ballgame that I am not going to address in this post. I am referring to people buying their personal residence or second home.
So they decide it might be right time, perhaps because they have been waiting a long time to buy or because they have had to move or simply something in their life has changed and so they have to move. Usually one would think that different motivations make clients have different attitudes towards the process and different expectations, however, I can tell you, the great majority of people looking for a home today are not exactly looking for a home but rather a bargain. It does not matter that this is the place where they intend to live and own for at least 7 years, or that they are not buying for Financial gain, they all still want that “killer deal” . I understand it, it is everywhere right? this is the time to buy, deals are out there to be had, etc.
I also get that we are talking about a major investment and so it is one that has to be well thought out financially. I do and I agree.
However, here is what is happening; Buyers start the process, so they begin looking at properties. At first their main criteria is the price per square foot. After that they each have different requirements, what I call wants / needs and absolute No’s. However , if the home does not meet the price per square foot criteria then it is out, no matter how perfect for them it might be. Now if all buyers are looking for that great home bellow the average price in the area, they are all looking for the same home and when it does show up so many people start making offers that the price goes up and it goes back to market value or above. This is made worse by all the Short Sales and Bank owned properties that come into the market with what look like amazing prices.
What happens over the next weeks, even months is that people will start opening more their parameters, all except for the value, the search becomes a second job for many of this individuals and at first it is fun and at first the thrill of writing up offers is
Exhilarating
, however after a while of searching but not finding, bidding only to see the property go too high in value to where it no longer is the bargain they were hunting for, they start getting frustrated.
They have seen everything out there and still have not purchased a home so at this point many people will sit down and re-draft what they are looking for…once again.
After a few months have gone by, the excitement has given way to frustration and the determination to despair, so, many decide to take a break, a couple of weeks off, not looking at any properties some might even stop looking on line altogether.
After this stage, some will decide to rent instead of buying, after all the market might still come down a little, and if it does not at least they are out of the roller coaster.
Others go back to the hunt, and start looking for a home to buy, only this time they are not excited and are just ready to get it over with. It is now that they realize that they should be looking for a home they like, not so much a bargain, they come to the conclusion that homes are well priced to begin with, so it is important for them to be looking at homes that are in the correct price range for them, NOT the Bargain they started looking for. They realize they are buying their next home and that some of the best homes show up above what they had considered to be the greatest deal, however they are still a great buy because they have all the things they look for in a home and they are not getting all the multiple offers.
It is at this point that most people finally come to realize their goal of buying their home and if they are really lucky, the home wasn’t even a short sale or foreclosure but a regular sale that even though it might still have some issues come up throughout the escrow process it will be a smooth ride because they have people on their side making sure it all happens and all conditions are met in a timely manner. Escrow closes and they have bought heir home!!!
So…going back to that buyer who happens to be out of the country at this time, I had a long conversation not only about how all those pages are required by the State of California as well as by my broker and many of them are there to protect both parties, but I had a long talk about what to expect from the emotional process and the perils of looking at this from the mindset that many people are falling to.
I was lucky enough to have a client that understood this and that was willing to give his emotional stability and his peace of mind a higher rank over getting the best deal.
Now don’t get me wrong, I am not saying that you should overpay, not try to negotiate or just ignore the fact that there are good opportunities out there, all I am saying is that it is important to understand what you can expect from the process and to make your decisions accordingly. It is about managing expectations.
One last clarification, I am not saying all my clients have gone thru this, many of them have not, with some of them we have even been able to get them that elusive great deal in the short term, but I am saying that I have seen this emotional cycle often enough to understand that it is a current trend of the process of buying a home in today’s Real Estate Market
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