I often hear excited buyers say they want to get an amazing deal or buy a home for half price. Sometimes people even tell me that they want to buy a place they can sell in a year or two for a profit. My response might seem blunt, but it’s genuine and looking out for the interests of the buyer (assuming you are not a savvy investor, but more of a buyer who is new to this market). I gotta be honest with you, in my opinion this is a risky time to try to sell a place in two years for a profit. That’s me. The inscription on my money clip says, “The safest way to double your money is to fold it over once and put it in your pocket.” What happens if you buy an “amazing deal” next week and it’s worth 10% less than what you paid two years from now? For a savvy investor who has a plan, that might not be a big deal, but for the average person out there this scenario can send you into a financial downward spiral. Is it worth it? In my mind, people who buy in this market should be thinking long term. By long term, I mean 10-20+ years. I have met way too many people who got burned by thinking they were going to sell at a profit in a couple years. I bet you have, too.
Have you heard from a friend of a friend that the thing to do in this market is find a home that is half price and flip it for a profit? I’m sure your friend had the best of intentions, but when you say “half price”… half of what?
1. Half of what the prices were in 2005? If that’s the case, then pretty much everything on the market today fits that criteria. That's nothing special.
2. Half of what the home is really worth in today’s market? You won’t find that unless you have all-cash and are willing to buy at an auction without doing any inspections and having never set foot in the home prior to buying it. Even savvy investors make mistakes at the auction and buy homes they can’t make a profit on. And very, very few of them ever buy homes that are “half price”. Savvy investors may go in and buy a home at auction for $200k… put $30,000 into it and sell it for $280k. This is called flipping, but they are also taking risks to make that profit. I see this happening all the time in today’s market. For more about flipped homes, read http://globella.com/flip.
Do you consider yourself a savvy investor with lots of cash to blow or a normal consumer who wants a home to live in (and would love to get a great deal)? My typical client is the normal consumer. My clients’ primary concerns are buying at a fair price and finding out as much as possible about the home to eliminate surprises in the future, so that they are still happy they bought the home two years from now. There is a LOT to think about when buying a home, and I have listened to way too many stories from people who feel that real estate agents are more concerned with selling people a home than they are with putting in the extra work to help a buyer truly find the home that is right for him/her.
Check out this article on my website to find out more about how I work for you, the home buyer: http://globella.com/thrilled.
Justin Gramm is the founder and principal broker of Globella Buyers Realty, your San Diego Exclusive Buyer Brokerage. He also writes this blog, "For San Diego Home Buyers."
Exclusive Buyer Agents do not list homes for sale and never represent sellers. They have no "inventory" to try to sell you. They can represent you in purchasing any home. They are specialists at representing buyers only on the buyers' side of the transaction. Exclusive Buyer Agents work to get buyers the best price and terms when they buy a home.
If you have excellent credit and plan to buy a home or condo in San Diego County within 90 days, contact Justin Gramm to hire an agent on your side of the transaction. Call Justin at (858) 437-2662 or E-mail.
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