Dear Monty: Young homebuyers torn between relatives
Reader Question: We are having trouble navigating two opinions about how quickly to act when new houses come on the market.
The only suburb that will work for our circumstances is a very competitive market. Many homes sell after only 1-10 days on the market. Sometimes a house is listed on a Wednesday with an open house on Sunday, and there are several offers even before the open house.
Two family members, Ann, and John, our Realtor, are advising us. Ann says we need to go see houses as soon as possible, even the first day. John suggests that we wait for the open house. He says we have time to buy a house. He is also concerned about dual payments if we close to early. My concern is that it is already July. If we don’t find something in summer or fall, it’s going to be hard to find something before our apartment lease is up in May. I’m also concerned that if we wait until the open house, we might miss out on the perfect house. We have seen several houses, but John has quickly seen the negative aspects. John lives about an hour away from where we are looking, so it is hard for him to get here, although he says he does not mind. He says he can tell from the pictures online whether a house is good, but I need to see the house.
Should we go and see an interesting house as quick as we can, or should we wait until the open house to see it? Haley and Chris A.
Monty’s Answer: Your lease termination date is nine and one-half months away in 2016. You want to buy in a large community with a robust market; the housing stock is plentiful. The home you like best could appear in January. Perhaps there is a middle ground.
The chances are good that the seller will not wait months to close if you found your dream house today. You could experience considerable dual payments. Can you easily afford this, or will the added expense crimp your style? You may be better off applying part of that cash to the house with an over-list-price offer.
On the flip side, look at the trending homes values in the market. It is also possible the typical home you are seeking will increase in value during this nine-month period or interest rates increase. Then, the financial part could be a wash. John can access MLS data to demonstrate the trend during the past year. If the trend is expected to continue, a price projection may change John’s opinion.
Remove the obstacle
Consider going to your current landlord to learn if they will negotiate your rent obligation if they re-rent your apartment early. Here are three suggestions the landlord may consider:
- Early termination fee.
- Rent ceases when they re-rent the unit (you agree to make the place sparkle at showings).
- Pay a rent increase now to go unilateral month-to-month.
If they agree, memorialize it by amending the lease document. By neutralizing the dual rent, John may be very willing to change tactics.
Agree upon a home search plan
Have a heart-to-heart conversation with John. Tell him you want to have a plan in place to overcome his hour drive. Both of you want this experience to end happily with no hard feelings.
- Suggest John program the MLS computer to send you each new listing that meet your requirements instantaneously and automatically if he hasn’t already.
- You promise to drive-by the listing before deciding whether or not you want to see it. John will appreciate a drive-by is far superior to photographs.
- How much lead time does John need on short notice? If you call John and he cannot make it, ask him to consider paying a “showing fee” to the listing agent if you decide to buy the house. He may be agreeable to this because you are all family. He has to make a phone call to the listing agent to get agreement and defeat a procuring cause issue. John can do the second showing and write the offer.
- Get a pre-approval letter from a lender. If the seller of the home you love has three equal offers and only one of them furnished a letter from a lender stating they have pre-approved your loan, which buyer will they choose?
To find additional home buying information go to http://dearmonty.com/home-buying/ for help.
“Richard Montgomery gives no nonsense real estate advice to readers most pressing questions. He is a real estate industry veteran who has championed industry reform for over a quarter century. Send him questions at DearMonty.com.”