Picky First-Time Buyers Losing Out on Great Housing Deals
March 9, 2011
Tips & Trends
From Rory S. Coakley on some of the latest real estate news and happenings.
Picky, picky, picky! Are today’s first-time home buyers passing up great deals because they insist on flawless “move-in ready” houses requiring little or no changes – even at the starter-home price levels at which shoppers traditionally have been willing to factor fix-ups and renovations into their offers?
Or are they simply reflecting market realities? They see record inventories of houses sitting unsold, and they may not have the money, time or inclination to do fix-ups after making the purchase.
Large numbers of real estate agents consider this a significant and perplexing issue, one that’s having a negative effect on the housing recovery. New research suggests that they may be on to something. A survey by [a local real estate company] of 300 first-time buyers found that a startling 87 percent said that “finding a move-in ready home is important” to them.
A posting about fussy buyers on the 203,000-member “Active Rain” online real estate network in late February drew strong support from agents nationwide. Holly Kirby Weatherwax, an agent based in Reston, who wrote the original blog post, said in an interview that some shoppers are so picky that they walk out of well-priced houses solely because of relatively minor imperfections such as:
- The kitchen appliances are by different manufacturers.
- There are no granite countertops – even though the house is a modest-priced starter home.
- A carpet needs to be replaced, or the color doesn’t match their furniture.
- Wall colors are “wrong,” such as white, when for today’s tastes, they should be a warmer hue.
“They’re missing out on some excellent, older lived-in houses – it’s a shame,” she said, “simply because they can’t overlook” flaws that would not have bothered shoppers during the previous two decades.
Zillow, a giant Seattle-based online real estate research and data company, suggests that any shift by consumers toward greater attention to home details may be an inevitable byproduct of today’s higher down-payment minimums and more stringent loan qualification requirements.
According to Zillow researchers, the median down payment in 11 major metropolitan areas has jumped to 20 percent, compared with “close to zero” in some of the same areas just five years ago. In other words, first-time buyers today have to put a huge effort into coming up with their down payment, and they want to make sure that equity investment goes into the house that will need the fewest and least-costly upgrades. Also, Zillow spokeswoman Katie Curnutte said, shoppers in 2011 “are really in the driver’s seat. Nationally, buyers who purchased homes [last] December paid 4 percent less than the asking price. That points to a lot of room for negotiating and opportunities for buyers to be choosy.”
Some agents suggest that buyers today tend to be hipper and more sophisticated about home design, furnishings, floor materials, countertops and appliances because they are exposed to far more information on cable TV than earlier generations. Michael Jacobs, a Coldwell Banker agent in Pasadena, Calif., says cable channels such as HGTV “certainly have opened the eyes of more buyers” to design and presentation details. He said he’s held open houses where young buyers walk in and say immediately, “Oh, this house has been staged” – an observation virtually unheard of years ago.
But constant exposure to cable design shows may also be fostering a lack of realism on the part of some shoppers, according to agents. Cindy Westfall of Prudential NW Properties in Lake Oswego, Ore., said the shows have “given some buyers the impression that all homes should have granite counters, stainless steel appliances, etc. There are a few [shoppers who] want all the bells and whistles of that $500,000 house for $200,000, and no amount of talking to them on the realities can change their minds.”
In an interview, Westfall said she recently had a buyer who was interested only in older houses under $200,000 – starter-home price territory – but who wouldn’t tolerate even the sort of minor imperfections and nicks that older houses typically display.
“The fact is,” Westfall said, “you just can’t have it all. You can’t have the big yard, the top-line updates and all that in a starter home. You’ve got to compromise somewhere or else you’ll never buy anything.”
If you would like to suggest a topic for comment in one of our future emailers, please let me know. You can always reach me at firstname.lastname@example.org or by phone 301-637-0966. I look forward to hearing from you!
Rory S. Coakley
Coakley Realty, Inc.
20 Courthouse Square, Suite 107
Rockville, MD 20850
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