First-Time Home Buyer Competing With Shark Investors

5 Comments so far

1. Sue H on June 17, 2009 11:12 am

   We were in the same position as you just recently.
   First timers with little money to put down.
   Every time we found a house we were interested in which would suit our needs, it got pounced upon by many unseen other buyers who were willing to pay more the realtors said.
   So we began looking at the lower priced homes, fewer bedrooms than we wanted, smaller yards and square footage. When one we liked more than the others unexpectedly went way down in price we acted quickly and made an offer. Immediately they said another party was contending. We then offered $30k over the asking price (still way within our loan amount) which knocked out the competition and we got the house! That was months ago and we are still so glad we went ahead and purchased a home.
   We were renting for years and our rent was always going up up up. Now our mortgage is stable and our utilities are HALF what our former landlord was charging us. Also, after a few months my husband’s work slowed so we are sure we would not have qualified today for this little house.
   My advice to all renters is to definitely buy a home right now if you possibly can!

2. Mary Ann on June 17, 2009 11:50 am

   Sue, thank you for speaking out about your experience!

   I agree that the key to success for a first-time buyer is to adjust your expectations to fit the current market.

   It is disheartening and saddening to see first time buyers disappointed, frustrated and finally burnt out by repeated attempts to ‘catch a bargain’. Those homes priced under market value, (often bank-owned properties), are hotly pursued, and often sold to all-cash, or mostly-cash buyers, whether they be investors or not.

   I agree with your strategy: step back, evaluate your options, reset your ‘wants’ list, the price point, and perhaps the location, then re-enter the market at a level where you are able to have an upper hand in the negotiate.

   And it is a good market for first time buyers, isn’t it?

3. Rian Dean on June 17, 2009 12:50 pm

   It is up to the Realtor to properly educate their Buyers on the reality of this market. What I point out is that the market has shifted; the ‘bargain’ houses are hotly contested and more often than not, they sell for above the list price.

   I council my Buyers to carefully analyze the value their target has to them and to pick an offer amount they are satisfied is the most they are willing to spend. That way if they win they win, if they lose then someone else was willing to pay maore. The idea that banks will negotiate back and forth is fun to toy with but it is something I rarely see happen these days.

   Ultimately it is the Buyer who needs to be sure of the offer they are making , all I can do is provide the accurate information and make sure they truly understand the market. Buy like you mean it.

4. Becky on July 21, 2009 11:59 am

   My fiance and I have been pursuing foreclosed properties as they are about all we can afford. At first we were very excited. We found homes that were structurally nice but needed A LOT of rennovation. Fortunately, my husband to be is in construction and can do most or all of the rennovations himself. Sadly, even these run down properties that we thought would deter investors are being snatched up in mass quantities and forced into rentals. We simply can not pay cash for a home and so we have lost eight homes so far. We are close to giving up. We talked to a neighbor of one foreclosed home and he said he would be absolutley thrilled to have a young couple move in as owners who actually want to stay in the home. Instead, it will be renters bringing down the price of all the neighborhood homes. The every day buyer just can’t compete. We have made offers on highly distressed properties, made plenty of downgrades on our expectations, and offered even more than the asking price and yet I feel we are drowning in a sea of investment sharks, many whom don’t even live in the state. It’s disheartening and exhausting. We will likley rent a few more years until we qualify for a better mortgage.

5. Kevin on July 27, 2009 7:21 pm

   My wife and I had our doubts about living in San Diego as we are totally alone on this side of the continent, with our two kids. However, when the opportunity to own a home presented itself we talked it over and decide to plant roots here. We got qualified, contacted a great agent and began our search. Since then it’s been one disappointment after another. Based on what we were qualified for, we are basically forced to look at foreclosures and bank owned properties, all of which need considerable work done to make them livable; but since we plan on living there we have no problem putting in the work over time and investing in the home. We have made offers on at least 10 houses, and all at our max price, and even agreed to pay all closing costs…but, we are constantly being beaten out by investors, many of whom are offering tens of thousands above the listing price and paying cash. Honestly, we don’t feel there is anyway to compete and we are close to giving up on that dream. If we’re unable to find a house in this market, I don’t see us becoming home owners in the near future. I know investors have just as much right to purchase properties as everyone else, but how are first timers supposed to compete against them? Put simply…we can’t.