There is a group of potential homebuyers that are slow to pull the trigger when it comes to homeownership. As an investor, it is only natural to want to tap into this buyer pool. To do so, you have to understand the motivations these buyers have and what issues hold them back. When we buy houses Buffalo buyers tend to hesitate to purchase for six main reasons. The same motivators paralyze potential buyers in other markets as well.
1) Title Fraud Concerns
Millennials have had different exposure to the home buying process than their predecessors. They believe many lenders to be crooked and questionable.
Things like the robo-signing scandal and title scams have left a sour taste in their mouths. While it is important for potential buyers to be aware of the risks, it should not be something that stops them from realizing the dream of homeownership. Precautions such as title searches can pinpoint possible issues early. Title insurance adds an extra layer of protection to real estate transactions.
2) Concern About Access To And Approval For Financing
The perception it is difficult to get a mortgage loan, or investor mortgage discourages some people from even trying. It is unfortunate because there are so many financing options available. Interest rates are impressively low, making it easier for more people to obtain financing.
Since there is no guarantee the same offers will be available in the future, potential buyers would be wise to take advantage now. There are billions of dollars in credit available to potential buyers. With lower credit scores transactional funding, hard money lending, and seller-financing may be viable options. All it takes is diligence and research to make buying a home a reality.
3) Mistrust About The Stability And Future Of The Market
There are a surprising number of potential buyers who are qualified but lack confidence in the market. Those buyers are opting to not move forward with home ownership. However, the data against market upturn is negligible.
Overwhelmingly the data supports confidence in the market and stability for home buyers. Naturally, there will be fluctuations in the market. There always are. The best course of action for both investors and buyers is to recognize and account for market strengthens and weaknesses. Buying now can reduce housing costs and afford the opportunity for wealth and income growth.
4) Misconceptions About Down Payments
Lean economic times have depleted the savings of some investors and buyers. Assumptions about how much money is needed for a down payment can be a deterrent. There is no way to know how much money you will need, or how short you are of that amount without checking. There is everything from loans that need no down payment, to down payment assistance programs to lessen the initial burden. With a bit of footwork, home ownership can be a real possibility.
5) Inventory Limitations
People are looking for great deals, and on the surface, those may seem in short supply. However, the market has had an influx of stock. Buyers have more choices. Finding deals is possible with a little patience. Keep in mind there is real estate that is not openly advertised and shadow inventory.
Those properties are purchase options. Potential buyers are a bit spoiled after the market’s drastic lows. Just because deals won’t be discounted at 30 to 50 percent off market value, does not mean they are not good. In five or ten years, a purchase made today will seem like an amazing deal too.
6) The Belief That They Cannot Afford A Home
Housing is becoming less affordable nationwide. However, resources like Zillow say owning a home is less expensive than renting. In fact, renting may be twice as expensive as owning.
Low-interest rates are an opportunity to buy, but demand is pushed prices up higher than the ultra lows millennials have experienced. It skews their rationale about purchasing. Without being proactive, prime buying opportunities for desirable locations may be lost. This creates situations where buyers are pushed out to suburban areas to find the combination of value and lower housing payments they desire.
Overall, choosing not to buy now can ultimately make housing and investment opportunities more expensive in the long run. As housing prices increase the unfounded concerns millennials have today will become realities. Choosing to tap into the market today will lay the foundation for being one step ahead in the future.