If You’re a Home Buyer, Read This…

“The best time to buy, is when there’s blood in the streets”

        John D. Rockefeller

 

“Timing is everything”

          Anonymous

 

“Just Do It”

          Nike

 

Opportunity  Prolific words for today’s market.  Actually, for this WEEK’S market.  A more simplistic analogy for how some of these billionaires became billionaires – “buy low and sell high”.  Wow, brilliant! Novel concept.  Barring inheriting tons of money….to me, this is the most common sense recommendation for how to truly make money off your investments, whether that’s real estate, or stocks, or any other liquid vehicle.  This is truly the “duh” factor.

 

But of course, the selling high piece often takes some waiting time for the right moment to sell.  Not months. Years.  Many years. As it relates to real estate, this is NOT a flipper’s market anymore. Gone are the days of buying something “cheap” and making a fat profit in just a few months.  Trying to “time the market” is a losing proposition. Anyone who tells you they “timed the market correctly” is – more than anything else – not smart, not prescient, but flat out LUCKY. Flippers need not apply (related post here).

 

Now, this is not meant to be self-serving – like when a realtor says “right this second is

the best time to buy” – but, despite this week’s miserable economic news, and here’s the essence of this tome: if you have the need/commitment to purchase something, and you have the financial wherewhithal – in layman’s terms, you either can actually qualify for a mortgage, or you have all cash to put down, why would you NOT buy during these times?

 

Yes, gas prices are high. Yes, financial institutions are in turmoil. WaMu? Holy crap, they’re out of biz? Yes. The biggest — bank failure — in HISTORY. Unemployment high, wages are lower than 8 years ago.  If you can’t afford to buy a home, then simply and realistically, you should NOT buy a home. That, my friends, is the anti-Nike slogan, “Just DON’T Do It”.

 

But like I mentioned, if you CAN afford to buy a home – and you NEED to buy a home – wouldn’t common sense dictate that you buy when there’s less competition forcing you to spend more money than you intended?  Does anybody really make money when they overextend themselves? Someone please tell me if I’m smokin’ crack with this opinion.

 

Let me rephrase that with a multiple choice question:

(A)  Do you want to purchase a home that meets most of your needs, when prices are skyrocketing, when you have to compete with 6 other motivated buyers, and you’re likely to pay WAY over asking price?

(B)  Do you want to purchase a home that meets most of your needs when nobody is buying, you can probably get it for less than asking price, and use the money you saved to bring the house up to 100% of your needs?

 

Keep in mind, with option A, you have a 5 out of 6 chance of being disappointed. And you’re going to probably pay a disgusting amount over asking price (see here for an example). 

 

But keep in mind that with option B, don’t expect sellers to completely drop their drawers – it’s rare to see sellers take anything less than 90% of asking price these days (just talking about the Peninsula here in Silicon Valley).  Yes, some sellers NEED to sell, but more often they won’t be completely unrealistic about how low they’ll go.

 

The word…of the day.

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