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Home Buying for Beginners

Three Important Takes on a Very Important Purchase

COVID-19 caused significant disruptions to our everyday lives that have created ripple effects across a variety of industries. The housing market is no exception. During the past two years, many people have left behind the urban sprawl of mega-cities for smaller and mid-sized markets like Richmond. This influx is fueled, in part, by the rise of flexible work schedules, which support a home base that may be a longer commute – or even a plane- or train-ride away – from one’s workspace. 

But the big-city exodus to smaller markets has also brought with it a flood of big-city cash, making it increasingly more difficult for traditional homebuyers to compete for homes they were once overqualified to purchase. A typical prospective homebuyer – a double-income couple with pre-approval for a standard mortgage, for example, is increasingly unable to compete with an all-cash offer, often presented with no contingencies. The housing squeeze is limiting traditional buyers’ access to home ownership, which is a cornerstone to building generational wealth in
this country. 

How can traditional buyers make the most of their position in this difficult market? Here are three ideas to consider:

1. Reevaluate your needs.
As prospective buyers begin their search for the perfect home, they should reevaluate and perhaps rethink their definition of what makes a home perfect. Is there flexibility in the buyer’s work schedule, or can they work from home? If so, buyers might be able to widen the net when it comes to the location of their dream home. This flexibility may allow buyers to explore other neighborhoods, or even nearby towns or cities, that may have more favorable tax rates or better school districts. Additionally, while many buyers are sweetening their offers by removing traditional inspections from the deal altogether, this risk may not be one that all buyers are willing to take. Some buyers might consider bringing a trained inspector with them when viewing a home. Even during a brief showing, a trained inspector should be able to offer insight to potential buyers that might make them feel more confident removing the official inspection contingency from a contract. In short, the ability to reimagine your perfect home might just be the key
to finding it. 

2. Personalize your offer. Prospective buyers should never underestimate the power of making an emotional connection with sellers. The sale of a family home is personal, not merely transactional. If you have made an offer, a heartfelt letter introducing your family or explaining why you love the home could ultimately make the difference in a multiple-offer scenario. Many sellers are attracted by the idea of being able to imagine the next generation moving into their home, so the more vivid and appealing a picture the buyer can paint, the better. The prospective buyer’s agent can provide guidance about how and when to make these types of appeals to the seller’s heartstrings.

3. Wait and see. Ultimately, buyers should be clear-eyed and honest with themselves about the realities of the market. For most Americans, their home is their largest asset, so the long-term goal of building wealth should always be balanced with the need to live within one’s means. With inflation and interest rates on the rise, prospective buyers should at least consider the option of investing the money they have earmarked for a home and waiting out the current market idiosyncrasies. Ultimately, rushing into a purchase that doesn’t make financial sense defeats the purpose of acquiring the asset in the first place. Markets can and will adjust, and patience might just be the name of the game for many buyers as we all live, learn, and work in a complicated socio-economic landscape.  

Rudene Mercer Haynes is a partner at Richmond-based Hunton Andrews Kurth LLP where she focuses on financial services and real estate investment and the finance industries. She is the mother of two children and lives in Midlothian with her family.
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