Don't Buy A House
And Don't Be the Most Desperate Buyer
I’ve been working with a lot of buyers this year but not many have actually bought.
And I, as their professional real estate broker, completely supported their decision every single time.
Realtors are notorious for saying “it’s a good time to buy” even when it’s absolutely not a good time to buy. There was probably a Realtor saying “it’s a great time to buy the day before the housing market started to crash during the “Great Recession”. If they had realtors in Ancient Rome, one of them was likely saying “It’s a great time to buy just as the barbarians rolled in.”
Sometimes the right answer is to wait and when the choice is between a bad deal and no deal, it’s better to say “No Deal.”
To give you an example of what I mean, I was recently working with a buyer looking for a single family home to fix up and flip. We found one and boy did it need fixing up. Fire damage, mold damage, missing walls, missing floors: it was a project. My buyer did the prudent thing and determined how much the home would be worth after fixing it up and the cost of the repairs and we put in an offer with those numbers in mind.
But someone else “wanted it more”, which is generally not a good thing in residential real estate investments, and they paid MORE than asking for this project house. We had a chance to match or surpass, but when we did the math, we figured we’d have to sell it for $100k MORE than the market could reasonably bear after repairs. And so my buyer walked away from what would’ve been a very bad deal.
Within a couple of months, that house was fixed up by its new owner and they listed it for sale…. about $100,000 above market value. They were working with the same numbers we had.
Fast forward to present day, they’ve come down about $30,000 in price, but the house still sits. And sits. And sits.
Don’t buy a house if it’s a bad deal. Don’t be the most desperate buyer on the market. You’ll end up losing a lot of money. There are deals for you in every market, but it doesn’t mean it’s always a great time to buy.
Market Update
Nothing changes substantially in the market until the Fed cuts rates. Maybe this fall or winter. The summer market has been slower than normal.
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Michael Perrone is a licensed managing real estate broker in Washington State and is the owner of The Perrone Real Estate Group. You can reach his office at 425-224-6040 or by subscribing and responding to these newsletters.