Buyers Selling Themselves Short. I have been showing some buyers qualified for a $200,000 home. Both of them have good stable jobs and they have no monthly payments except their cell phone bills, utility bills and insurance payments. They have been saving money for several years and are ready to buy a home. A perfect buyer, right?
So what is the problem here? They are trying to sell themselves short. They do not want to spend all they are qualified to spend. I have absolutely no problem with that. It is smart to buy on the conservative side but also smart to look into the future a little as to what your needs may be.
They are fixed on payment and have picked an amount that is the “magic number” and this number brings them under their qualified amount by about $50,000. The problem I see is that if they spend just a little bit more they will get so much more and will serve them better if their family should grow (which they are talking about now).
Sure the lower price home will work and meet the bare minimum of their criteria right now. But if they spend just another $20,000, their square footage will grow 200-300 square feet and they will get an additional garage. This is huge. That means when they go to resell, the home will compete more favorably with the rest of the market and probably sell quicker, too. I have said this over and over.
The difference in the two payments is about $100 per month. So today I have spent a good part of the day explaining to not get fixated on a payment amount and but look at the big picture. By taking advantage of today’s low interest rates, they can buy the larger home with more room, an additional garage, inside laundry room and larger bedrooms and closets. These are items that make a difference in resell so then why are these buyers selling themselves short? Being cautious is commendable but buying smart is more commendable. I just hope my niece will take her real estate aunt’s savvy advice.
Tomorrow is the day for the decision and I am hoping I got my point across and their lender’s encouragement will be enough to help these buyers see the better choice. My gut and experience tells me if they settle for the smaller home they will be calling me within a year saying the house is too small and they should have bought larger. The $100 difference will be a thorn in their sides they wish they could pull out.
I really do love working with relatives.