The Biggest Mistake Prospective Homebuyers Make...
Looking at Real Estate as an Investment Vehicle
I am always in the process of looking at or buying real estate. I guess I choose real estate as an investment vehicle because it's something that I understand, being in the business for so long, and so connected to the market on a day-to-day basis, etc.
Currently, we are looking at purchasing a property in the city of Coeur d'Alene in North Idaho. We own a good chunk of rural property there, but whenever we go up in our RV, I feel bad for my kids.
So, if we were to sell one of our rentals in San Diego, and 1031 exchange it into a property in Coeur d'Alene we could AirBNB it out when we are not there, and when we ARE there the kids would have a great base in town so that I could go out to the property and get on a riding lawnmower and into a tractor for a few days without them begging me to go home.
Dealing With A Shifting Real Estate Market
So I am currently in a position - like most people - where it's apparent that the market is shifting. Obviously, sellers cannot put their homes on the market for 100K over the last sold price and expect 20 cash offers.
It's a little bit more of a buyer's market. So I was watching a video on a friend's page. The person in the video was saying that even though rates were going up slightly, prices going down and the ability for buyers to negotiate was making it a great time for buyers.
And for the most part, I don't disagree. If it's a long-term purchase, and you find something you like. I think it's always a pretty good time to get off the rental train.
Which Way Will The Market Go?
But one thing was missing. The person in the video said "Last month, let's say it was a 750K price, and now you can get it for 675K. Even with rates going up, your payment goes down..." So that was the gist. For me, what was missing was the fact that we haven't SETTLED yet.
People seeing prices go from 750K to 675K are STILL WONDERING IF NEXT MONTH THEYWILL BE 625K... So they are gun-shy.
I feel the same way for sure. If I find the right place, I will pull the trigger - but if not, I am in no hurry because I am waiting to see how this thing shakes out...
The Biggest Mistake Buyers Make
That is where I see the biggest mistake buyers make. They wait too long to prepare for the market to settle. Once they REALIZE the market has settled, it's too late and they are back into competition with everyone else.
So, here is what I (and all of my smartest clients) do. I prepare. I plan. I have my loan file ready to go. Then, when an opportunity presents itself, whether it be this week, this month, or later this year, I am ready to go.
I am not going to wait around for the market to turn to have my ducks in a row. ALL of my smartest clients have an ongoing pre-approval sitting with us ready to go. ALL of my smart investors who invest in real estate have a file approved with us so that they are ready to go if an opportunity presents itself.
Banks and Pre-Approval
Big Banks have done a horrible job of creating a situation where people think they should just wait until they are ready to put an offer in and "apply" but it's because big banks aren't very good advisors. They are more like loan vending machines. And there is not a lot of value in a loan vending machine.
Getting pre-approved early and having a file ready to go keeps you in the drivers seat. It makes sure that there are not credit or income issues that can be addressed now that would be too complicated to address in a short time period - so it also ensures you get into a position to get the best rates and terms, etc.
Get Your Ducks In A Row
Not getting your ducks in a row puts you in danger of having unexpected credit issues, a miscalculation of income necessary to qualify, or a misunderstanding of prospective payments to budget for.
It leaves you blind to what could be necessary in cash, and will almost certainly keep you on your heels if a good opportunity comes up, creating a situation where you have to rush and increasing stress throughout the process.
So, if you haven't yet, check out my video above, and if you have ANY kind of possibility that you may be looking for a property to purchase in the next couple of years, you would be SHOCKED at how many of my clients think they are buying in a year and then end up finding the perfect opportunity prior to that date. The ones who are prepared thrive, and the ones who do not have a very difficult, stressful time, and sometimes miss out on great opportunities.
The Final Word
Be one of our smart clients. We won't push you to buy, and there is no cost or obligation to have us work on your behalf to get into the best position possible. Let us do what we do best, and get you where you need to be.
Ready to get your ducks in a row? FOLLOW THIS LINK and schedule a quick strategy session with me! Don't make the same mistake that I see so many buyers making.