If you are in any way just a bit familiar with the new home buying process, you’re probably aware that builders are sticklers when it comes to their prices. The ‘Plan 1’ you’re interested in costs ‘X amount,’ plain and simple. Builders almost never negotiate on pricing.
And when the housing market is booming, those prices that builders almost never negotiate typically go up – just like any other home seller. But what happens when the market isn’t booming? What happens to those prices that builders almost never negotiate?
If you’re interested on how to win big with a new home, keep reading and you’ll find out!
On July 24th, 2018, CNBC published a story online titled “Southern California home sales crash, a warning sign to the nation.” The timing of this story roughly marks the beginning of the ‘Price Correction,’ as many in the industry are calling it.
The Price Correction stirs thoughts of the Great Recession, but it’s an entirely different beast. For years, our market in Southern California has seen staggeringly low inventory levels, bottoming out in December of 2017 at an all-time low. This super-low inventory caused prices to skyrocket. In conjunction with low inventory, the available homes that were on the market – especially new homes – were being relentlessly pursued by foreign investment, mostly comprised of Chinese cash. For several years now, the primary influencer of home prices and sales (at least in SoCal) has been that Chinese cash and it’s propped our market up disproportionately to the reality of it.
I’m guessing you’ve watched a 30-minute episode of Property Brothers or Fixer Upper or any other home renovation show on HGTV and thought to yourself: ‘Hmm, that doesn’t look too hard.’
Well, think again. My very first renovation project had a budget of $20,000. I was going to be done in two weeks. $60,000 and 3 months later I was finished. I was an unprepared newbie who had built up too much confidence from watching HGTV and DIY clips on YouTube – and I paid for it.
I’m going to reveal a very private secret of mine: Jonathan & Drew Scott from Property Brothers are my heroes. And if you don’t know who I’m talking about, then we can never be friends because it’s obvious you’re not addicted to HGTV like I am.
If you are addicted to HGTV and shows like Property Brothers or Fixer-Upper, or if you’re thinking of tackling your own fixer-upper project, then this article is meant for you.
Fixer-uppers have grabbed the attention of many prospective homebuyers, mostly because of the shows on HGTV. People watch a 30-minute episode, see some happy couple take a few swings with a sledge hammer, watch as way too much shiplap is installed and then voilà, their dream home is ready.
What HGTV doesn’t show you is, in my opinion, what’s most important. If you’re like me, you probably wonder how those happy couples afford both the home and the renovation. Or perhaps you’re curious about what goes into planning and successfully executing a renovation project, or how to even find the right fixer-upper in the first place.
Let’s be blunt: real estate agents have the residential re-sale market completely monopolized. And because it’s monopolized very few agents must justify their commission fees, and very few consumers know how to validate those fees or confront agents when they have questions regarding them. This is a great situation for me. It’s a pretty sucky situation for you.
It’s probably one of the questions I hear most: “Are we in a bubble?”
Home buyers are growing timid as interest rates increase and the price of Orange County (and Southern California) homes continues its seemingly never-ending trajectory that began in 2012. With the pain of 2008 still fresh in people’s minds, more and more consumers are fearing a repeat.
That fear, for the most part, is based on one factor alone: home prices. Taken by itself, the run up in home prices over the last 5 years would seem to mirror the same run up that occurred prior to 2008 and legitimize any concerns consumers have regarding another bubble. It looks the same, right? So, isn’t it fair to assume the same outcome may happen? Not at all.
I like to compare buying or selling a home to filing taxes. You don’t do it very often and chances are, when you do, you rely completely on someone else to help guide you through the process and you pray that they know what they’re doing. Unless you understand the IRS tax codes inside and out, there’s really no way for you to know if your ‘tax professional’ is getting you the best (or correct) outcome. And as great as praying for the best outcome for your taxes can be, one of the greatest financial transactions of your life shouldn’t be left to hoping the big man upstairs has your back.
Instead, you need a Realtor who has your back. Someone who knows their stuff, behaves ethically and can provide you the most opportunities possible. Just like tax time, unless you really understand what’s going on, how do you know if your Realtor is providing you the most options or the best outcome?
You’re getting ready to start your house hunt. Cool. Maybe you even have an agent already. Double cool.
You’re about to do what 98% of other buyers do: use a real estate search engine or rely on your agent to send you listings from the Multiple Listing Service (MLS), or a combination of the two. Chances are you’re going to find a house (or houses) you like, your agent will arrange some showings, you’ll ‘oooh’ and ‘aaah’ at the perfect one, submit an offer, some magical real estate stuff that agents can never reveal will happen and then you’ll have a new home. Congratulations.
But was that ‘perfect house’ really the perfect house? Did you really see all your options? Did your agent provide you the most opportunities?
If you’re thinking to yourself right now: “man, I really hope Andrew answers the above questions,” then this article is meant for you. Because I’m going to teach you how to house hunt like a boss.