Q & A with the Real Estate Expert

INVESTORS THWART MANY FIRST-TIME BUYERS

Q: Dear Jay, I am a single woman, not independently wealthy but doing pretty well for myself. I live within my means and save religiously; I still owe on my student loan but the debt is not unmanageable. My five-plus years in the same, well-paying job has paid off in an abundance of transferrable skills and an impressive resume
(if I do say so myself), so I do not fear unemployment or obsolescence.

Having been a renter since my college days, I believe it’s time for me to buy a home of my own. It doesn’t necessarily have to be a new build; I just want a modest house with enough room to grow a little. Mortgage rates are low and it seems that every time I find a suitable place, it’s off the market before I can even call to inquire about it. Is there a conspiracy of which I am unaware? – Anita L.

A: Dear Anita, You are not alone in your frustration. First-time buyers may have the will and the way to purchase a house, but tight inventory can make starter homes less affordable than they otherwise would be. In many areas, that problem is exacerbated by real estate investors eyeballing those same properties with plans to offer them up for exorbitant rents.

Data from the National Association of Realtors® suggests that an entry-level home requires about 23 percent of a new buyer’s income. Investors typically have several financing options, so they can hand the seller a wad of cash on the spot. You, on the other hand, have to go through channels and hoops to procure a loan. You can’t blame a seller for opting for a bird in the hand, and competing against a cash buyer
can easily have you paying way more than you would if you were to approach the endeavor with detachment.

Breathe. Don’t get seduced by the first adorable house you see; even among slim pickings, there are others begging for loving owners. Find a real estate agent who
understands your needs and desires, and shop for a lender you can trust and with whom you feel at ease. They can help keep you grounded in reality, and together you can determine what you can afford and payments that don’t make you squirm.

Get your pre-approval before you start hunting; discuss any down payment
assistance programs for which you may qualify as well. Also, take the time to study
the neighborhoods. Some homeowners’ associations and developments, perhaps
conflating rentals with transience, impose lease restrictions to ensure a majority of owner-occupied properties.

Once your financing is in order, you can conduct your search seriously and move quickly on the home you want. It’s not impossible to get the jump on a presumptuous investor.