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Serving the Santa Maria Valley and surrounding Central Coast areas
Santa Maria, Orcutt, Nipomo, Lompoc & Arroyo Grande
Published on October 31st, 2012D'Ann Bartley
In low-inventory markets, some buyers are having a hard time finding a home to buy. I spoke to a buyer the other day who was very discouraged about the lack of inventory here in the Santa Maria Valley, and wondered if her agent was just lazy and not telling her about listings. As I had just completed my Monday Market Update, I could assure her there were only 84 available listings and some of those were condos!
However, there are steps you can take to improve your odds of finding a home at a time when interest rates are at record lows and affordability is high.
One approach is to broaden your search. Be clear about what it is you want to buy, but know too that home-buying involves making compromises. You don’t need to give in on the essentials if you are looking for a long-term home, perhaps long enough to get your youngsters through school, say up to 10-15 years. And avoid listings with major defects that will be expensive or impossible to fix.
The sorts of features you should be willing to give up, if necessary, are house style, or a large yard, which can be a maintenance drain. If you’re having no luck buying in your first-choice neighborhood, check out the adjacent areas. These could be the next turn-around neighborhoods when the overall housing market improves.
You could also do an about-face and consider condos rather than single-family homes, depending on your situation and family size and needs.
Be open to making improvements rather than holding out for a home that’s in move-in condition. Major fixers will probably be snapped up by investors to rehab and resell at a profit. However, if a listing isn’t receiving attention because of its dated décor, this could work if you intend to live in the property and not try to flip it for a profit. Be sure to work with an agent who has experience with cosmetic renovations, and can help direct you to contractors for bids. There is even a financing program available to assist with renovations at time of purchase!
You’d be surprised what updated plumbing and light fixtures, new paint, floor finishes, appliances and improving the outdoor living can do to turn a dowdy listing into a comfortable abode. Just make sure you don’t tackle too much. You don’t want to over-improve for the neighborhood, and structural issues are taboo.
Why exhaust yourself by bidding on a house you can’t get? Underpriced listings are often bid up in a low-inventory market. Wait to make an offer until you find a listing that’s priced within your affordability range. Once your lender has approved you, don’t look at homes way over your range. Low-ball offers won’t work in a market like this, and you can’t get into a bidding war on a home that is priced at, or over, the top of your range. It’s just too frustrating because you can’t compete.
Consider submitting a backup offer if your bid isn’t accepted. The transaction fallout rate is pretty high in this market. Keep looking for another listing while you’re waiting to see if the first deal goes through.
All-cash offers tend to win in multiple-offer competitions. To be competitive, try to put yourself in a position to pay all cash. If you have savings you can tap and you can secure a private temporary loan from parents or borrow from a 401(k), you might be able to make a cash offer. If not cash, at least a conventional loan with a strong down payment! Be willing to explore your financial options to the best of your abilities by working closely with your lender. Your Realtor and your lender should be part of your team, with all three of you combining your efforts toward one common goal: getting the best possible home for you, at the best possible price!
1. Broaden your geographical search
2. Be willing to compromise on condition, to a degree
3. Stay within your price range
4. Work out a winning financing strategy
When you are really serious about buying, give me a call. I will stick with you throughout the time it takes to accomplish a purchase, no matter how long it takes! Inventory is very low, so you need to work with an agent who watches it constantly and will alert you immediately; you need experience on your side to negotiate the deal. 26 years and counting. Call me at (805)937-5777 or send an email and let’s get started!