Buyers Selling Themselves Short

By
Real Estate Agent with Prudential PenFed Realty, "The Real Debbie Reynolds" Your Clarksville Real Estate Professional, 931-920-6730 TN Broker: 208698

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.

 

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Want To Know What Debbie Has to Say? 

If you are needing Real Estate services in Clarksville TN it would be my pleasure to assist you!

 

.


"The Real Debbie Reynolds" at
BuyorSellClarksville.com

Prudential PenFed Realty, 2503 Wilma Rudolph Blvd., Clarksville, TN 37040

An independently owned and operated member of BRER Affiliated, Inc.

Not affiliated with Prudential. Prudential watermarks used under license.

931-920-6730 (office)   931-320-6730 (cell)

                 

 

 

 

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Re-Blogged 1 time:

Re-Blogged By Re-Blogged At
  1. Mary Yonkers 08/18/2012 09:41 AM
Topic:
ActiveRain Community
Groups:
Diary of a Realtor
Realtors®
Tags:
low interest rates
relunctant buyers
conservative buyers

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Virginia Hepp
ERA - Mesquite NV Homes For Sale - Mesquite, NV
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Debbie - please make this a public post.  It is good thought for experienced buyers, too.

I work with a lot of buyers who are retiring, downsizing - I can't count how many times they downsized just a little too much.  Now they miss the extra closets and storage, an extra room for whatever?, bigger garage for stuff.

Aug 17, 2012 09:50 PM #1
Rainmaker
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Winston Heverly
Winston Realty, Inc. - Atlantis, FL
GRI, ABR, SFR, CDPE, CIAS, PA

I'm all about gambling done it for half of my life. The only difference today is there is so much uncertainty like never before or so it seems.

Aug 17, 2012 10:00 PM #2
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Debbie Reynolds
Prudential PenFed Realty, "The Real Debbie Reynolds" Your Clarksville Real Estate Professional, 931-920-6730 - Clarksville, TN
Your Dedicated Clarksville TN Real Estate Agent

Virginia, I will makeit public. I would imagine that is really prevalent in many markets, the very conservative buyer selling themselves short.

 

Aug 17, 2012 10:14 PM #3
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Debbie Reynolds
Prudential PenFed Realty, "The Real Debbie Reynolds" Your Clarksville Real Estate Professional, 931-920-6730 - Clarksville, TN
Your Dedicated Clarksville TN Real Estate Agent

Winston, It can be a gamble but if you use good sense and trust your Realtor it becomes a much more educated decision and maybe not quite so risky. 

Aug 17, 2012 10:20 PM #4
Rainer
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Laura Murray
Weichert - Silver Spring, MD
Search Montgomery Co., MD for homes www.MDRealEstateOnline.com

Some of my favorite clients are ones who are purchasing well below their limit.  i find them easy to deal with because they understand delayed gratification.  Recently sold a 400k house to folks who qualified for over a million.  400K in my market is modest.

Aug 17, 2012 11:20 PM #5
Rainmaker
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Joe Petrowsky
Mortgage Consultant, Right Trac Financial Group, Inc. NMLS # 2709 - Manchester, CT
Your Mortgage Consultant for Life

A Realtor referral partner recently referred a client. The were retiring and down sizing. Similar numbers that you decided in your post. They had a monthly payment in mind and weren't willing to exceed that numbers.

The problem was that taxes in the town they wanted, were extremely high, which was the problem. In each case almost $200 per month. After a lot of number crunching, the town became more important than the extra $200 per month.

Aug 18, 2012 02:42 AM #6
Rainmaker
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Barbara Todaro
RE/MAX Executive Realty - Franklin, MA
"New Franklin MA Homes"

Good morning, Debbie....some people just don't listen.... that means they'll outgrow it sooner and they'll be paying a commission to you before they should have by not making the right choice now....

Aug 18, 2012 03:08 AM #7
Rainmaker
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Wayne Martin
Michael Saunders & Company - Sarasota, FL
Sales Manager - New Homes & Condominiums Division

Debbie, sometimes being too cautious becomes a costly mistake! Conveying thsat message is sometimes a tough sell. Good luck!

Aug 18, 2012 05:33 AM #8
Rainmaker
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Jeff Pearl
RE/MAX Distinctive / LIC in VA - Leesburg, VA

I don't mind buyers wanting to be conservative on one hand and making sure they are comfortable with the monthly payment, but on the other hand, the longer they wait, the more likely interest rates will rise. Many new homebuyers forget to figure in household expenses like: trash service, tools for repairs, auto maintenance, insurances, lawn care and mowers, doctor and dentist bills, child care, pet care, parking and toll fees,life insurance, internet and cable fees, hoa fees, gas or oil for heat, chimney maintenmace, unexpected repairs like needing a new well pump, furnace breaking down, etc. More buyers should take their time and analyze like them before making a decision.

Aug 18, 2012 06:22 AM #9
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Debbie Reynolds
Prudential PenFed Realty, "The Real Debbie Reynolds" Your Clarksville Real Estate Professional, 931-920-6730 - Clarksville, TN
Your Dedicated Clarksville TN Real Estate Agent
Laura, I'm glad that your clients were happy with their downsize purchase. I bet every one of their needs were met at $400,000. They also stay away from jumbo financing unless of course they paid cash.
Aug 18, 2012 06:52 AM #10
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Debbie Reynolds
Prudential PenFed Realty, "The Real Debbie Reynolds" Your Clarksville Real Estate Professional, 931-920-6730 - Clarksville, TN
Your Dedicated Clarksville TN Real Estate Agent

Joe, Things like location, school zone, resale value, HOA fees are equally important in making the home buying decision as are the payments. I wouldn't advise my niece to be too risky and overspend under any circumstances. They aren't scare of the payment, it's more of they don't deserve or shouldn't have that nice a house if you know what I mean.

Barbara, It does tend to grow our business and if we advise and they don't take our advice, then we have done the best we can.

Wayne, Saying it without alienating them and them thinking you are trying to be just a real estate again trying to sell up ia a fine line.

Jeff, I really appreciate cautious and thoughtful buyers. All things need to be considered which some buyers never think of.

Aug 18, 2012 07:17 AM #11
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Barbara-Jo Roberts Berberi & Corinna Birgit Cromartie
Charles Rutenberg Realty - Palm Harbor, FL
Palm Harbor & Dunedin FL Residential Real Estate

Yes, while the monthly payments are important, you also have to consider that you are getting for the money. If you CAN afford the difference and are getting so much more for it, it is foolish not to proceed. Hopefully they will listen to you.

Aug 18, 2012 07:25 AM #12
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Debbie Laity
Cedaredge Land Company - Cedaredge, CO
Your Real Estate Resource for Delta County, CO

Sometimes our relatives can be our toughest customers. Please let us know how this turns out. Good luck. I hope your niece follows your great advice.

Aug 18, 2012 08:59 AM #13
Rainmaker
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Belinda Spillman
Aspen Lane Real Estate Colorado - Aurora, CO
Your Colorado Real Estate Resource!
Hi debbie. I run into this frequently and then I remind the buyers about the huge tax write off they will have with the mortgage interest and how they can actually increase their deductions to compensate for the increase in payment if so desired. You are right to get them to buy all they can while interst rates are so darn low.
Aug 18, 2012 09:01 AM #14
Rainmaker
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Mary Yonkers
Alan Kells 1-814-881-7548 - Erie, PA
Erie/PA Real Estate Instructor

Debbie,  Great post!  Glad you made it public so I can re-blog.  This post has so much to offer potential buyers.  Thank you. 

Sounds like you are dealing with many issues here. Please tell what your niece's final decision is. Good luck.

Aug 18, 2012 09:36 AM #15
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Debbie Reynolds
Prudential PenFed Realty, "The Real Debbie Reynolds" Your Clarksville Real Estate Professional, 931-920-6730 - Clarksville, TN
Your Dedicated Clarksville TN Real Estate Agent

Barbara-Jo, Well they are going for the bigger house and seem comfortable. We'll see if the seller accepts.

Debbie, Actually, I think being a relative is helping in this situation because she knows I have no hidden agenda just her best interest. My nephew is on board.

Belinda, I thought you were leaving on a much needed vacation. The interest rates will probably never be this low again and I want hem to take advantage of the best deal for them.

Mary, I am in the process of sending them an offer to sign on the higher price home. I will let everyone know how it turns out.

Aug 18, 2012 10:26 AM #16
Rainmaker
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Mary Yonkers
Alan Kells 1-814-881-7548 - Erie, PA
Erie/PA Real Estate Instructor

I have my fingers crossed for them and you, their agent.

Aug 18, 2012 10:55 AM #17
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Debbie Reynolds
Prudential PenFed Realty, "The Real Debbie Reynolds" Your Clarksville Real Estate Professional, 931-920-6730 - Clarksville, TN
Your Dedicated Clarksville TN Real Estate Agent

Thank you Mary. We'll just have to see how it turns out. It's going good now though.

Aug 18, 2012 11:32 AM #18
Rainmaker
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Roy Kelley
Realty Group Referrals - Gaithersburg, MD
Roy and Dolores Kelley Photographs

Thanks for sharing this story.  It might be easier to let them purchase the smaller home and then sell them a bigger home in a few years.

Have an outstanding week with your camera in hand.

Aug 19, 2012 05:21 AM #19
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Debbie Reynolds
Prudential PenFed Realty, "The Real Debbie Reynolds" Your Clarksville Real Estate Professional, 931-920-6730 - Clarksville, TN
Your Dedicated Clarksville TN Real Estate Agent

Roy, Ultimately it is their choice but they have decided to go for the larger home. That way they said it would fit their needs up to five years. I am glad they made the choice.

Aug 19, 2012 06:50 AM #20
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