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Tips for Buying a House in a Seller's Market

I'll be the first to admit that I watch a little too much HGTV:  Beachfront Bargain Hunt (my favorite...girls gotta dream), House Hunters (duh), Property Brothers (met them...very handsome and very, very tall), and of course, Fixer Upper (so stinkin' cute).  Then, there's Love It or List It (don't confuse this with Love It or List It, Too...not the same) with Hilary Farr and David Visentin.  LIOLI (hmmm....not sure I like this acronym) has been on the air for nearly 10 years, and I think I've watched almost every episode.

Here's the premise: A couple is considering staying in their current home or moving. One person really wants to move; the other really wants to stay put and remodel.  Nothing ever goes exactly as planned because, well, that's life.  And, although I watch the show often, I'm often surprised at the decision made by the family.

When it's a sellers market, the question, "Are you gonna love it or are you gonna list it?" becomes more than just a TV show catch phrase.  It becomes a question homeowners are asked daily.

Of course realtors, like me, want to know; our livelihoods depend on it.  But more often the dialogue occurs around the kitchen table between spouses and partners, parents and children: Should we sell the house or renovate? What will best meet our (or our parents or our kids or our grandparents) needs the best?  What are the costs?

Are you gonna love it?

On the TV show, those who choose to "love it" remain in the home for one of two reasons: current house location and history in the home.  Granted, before choosing to stay, Hilary and her crew worked wonders to resolve some design issues that the homeowners did not like.  The perks of TV...

Location.  Everyone knows the real estate mantra: location, location, location!  You can change everything about a house, except that.  How important is that location? Would quality of life be significantly effected by living 10 minutes from the current location?  What about 20 minutes?  Would school districts change? Walkability to restaurants, shopping, work?  For many, an extra 10-20 minutes doesn't change a thing.  For others it's a big deal.  Determine priorities.

History.  I lived in the same house from birth through college graduation.  It was large, super cool and really old (built in 1911).   My father passed away from cancer while we lived at that house; so did my dog.  All my significant childhood memories occurred there.  When my mom sold the house a few years after my dad died, I cried.  But, as much as I loved the house, it was a lot of work for the homeowner (my mom).  The kitchen and bathrooms needed major renovations; the windows were original; the yard was huge. None of us wanted to take on a huge renovation, so it didn't make any sense to stay. But, dang, it was really really hard to leave.

What history makes you want to stay?  How important is it to remain in the family home; why is it so important?  It is an expectation by others? Is it financial?  What are the pros and cons of staying and leaving?

Renovation.  To stay in the house and location that you love, often a renovation needs to occur.  If a family has outgrown the space, rooms and storage options need to be created.  If stairs have become an issue for an older resident, then ramps must be installed and main levels rooms reconfigured.  All this takes money. And, time.

TV shows have a way of making home renovations seem clean (wrong), and fast (heck, no), and on budget (wishful thinking).  In reality, homeowners should prepare to spend 20% over the quoted budget because issues will come up.  Plus, because there is a shortage of skilled tradesmen in Michigan (and nationwide), a renovation project may be delayed in starting and take longer that it would have in recent years.  And speaking of length of project, if renovation is a reality, the family needs to have a frank discussion of how they will live for months without a working kitchen, bathroom, bedroom, etc.

Please don't read this and think that I am anti-renovation.  I have managed a whole house renovation for my family, as well as smaller room-by-room projects.  Updates are necessary to keep homes usable; things wear out and need to be replaced.  In general, a home needs to be renovated every 15-20 years.  I love old homes...but I really love old homes with modern amenities.

Are You Gonna List It?

As a realtor you would think that my trigger response would to alway encourage people to list.  While I would be more than happy to list your home and help you find another equally amazing (if not better) place to live, the decision is not mine to make.  There are a lot of variables to consider.

Money.  Let's face it, money matters.  For the majority of people, a house is the biggest investment they will make in their lifetimes.  The economics of supply and demand states that price is dictated by supply.  When there is little supply (like now) it's a "seller's market."  Folks who consider listing their homes in this type of market are often lured by the notion of a higher sales price. Is money needed for retirement, to purchase another home, to pay off debt.  Look at your finances, talk to your banker or financial advisor, call me or another realtor for a home value evaluation.  Make this investment work for you.

Space.  The bigger the better....right?  Well, that depends on your needs.  You all have seen the "little house" show. Right?  While a 300 sf home might be a little extreme, many folks don't need or want a large house.  It's less expensive to own, plus there less space to clean and maintain.  If your children have moved out and the spare rooms are unused 90% of the time, maybe downsizing would be better.  On the other hand, if your family is busting at the seams of your current home, sometimes a renovation just won't do the trick.  You need a different house with more space.  Moving to a new home may be the only logical solution.

Amenities.  As I discussed above, modern amenities are pretty swell.  If you choose to renovate and add them to your current home, good for you!  It may increase the value of your home, but the cost of the renovation (besides the obvious $$$ cost) is time and inconvenience.  Sometimes it makes more sense to purchase a different home that has already been updated or a brand new house.

As you know, I've lived in 100-year-old homes, but I've also built a few houses, too.  As much as I love the millwork and charm of an old house, there is something to be said for spacious closets, laundry rooms, and state-of-the-art appliances.

The real estate market in Ann Arbor (and all of southeast Michigan for that matter) is hot, hot, hot! Homes are receiving multiple offers (heard of one recently that got more than 20!) and often going for above asking price. It creates a conundrum for those on the fence

Folks, I've walked in your shoes.  I've personally bought and sold many homes:  Made lots of money during a seller's market; paid lots of money in a seller's market. Lost some money in a buyer's market; bought a pretty fantastic home in a buyer's market.   If you are curious about how much your home would list for, feel free to contact me for a no-pressure property evaluation.

Selling your home shouldn't be a hasty decision. Gather the facts and discuss it with your loved ones.




Note: This article was originally posted on my real estate blog, "Sarah Sell My House."

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