Buyers in today's market are seeing some of the most confusing contradictions we've had in the market in my 18 years selling real estate. On the one hand, there is more inventory including more foreclosures and short sales than we've had in over 12 years, and we often see price reductions of over $100,000 on some even modestly priced homes. On the other hand, we see multiple offers with prices going over asking. It doesn't seem to make any sense.
Especially in these confusing times, pricing it right is the key to success. The hard part for a buyer to figure out is whether the price is right or can they offer less? Sellers are wondering whether the right price is too low and can they try just a bit higher? If the price is good enough to draw multiple offers, is it crazy to be in a bidding war when all the news says we're in a down market?
Here's the really hard part: you need to rely on the advice that moves you toward what you really want. This is true of any subject, from housing to your career. That means that your mother or nephew or friend at the office is not who you should rely on because they are rarely the ones who tell you to do something adventurous. They usually see their role in your life as the cautionary voice of what can go bad. This way, they are never wrong. If you ignore their advice and do something and it doesn't turn out, they told you so. If you don't do it, they were right and can never be proven wrong. And if you do it anyway and it turns out great, well, maybe you forget that they told you not to do it. The only advice that people seem to take from friends all the time which is risky is buying stocks. And that turns out badly so often, it's amazing.
What to do? Buy because you need a place to live. Buy because you want your own home in a neighborhood so you can be a grownup and a citizen and participate in the American Dream. Buy because you're tired of your landlord raising your rent and telling you you can't smoke in your own home, or own a dog, or paint your bedroom purple. Buy because you are tired of seeing all that rent money go to helping your landlord buy your house with you not getting any ownership of it.
Buying a house as purely an investment strategy is not a bad thing, but you cannot expect to see your stock share go predictably up like the accumulated interest on a CD. Over time, say 5 to 10 years, you are pretty sure to see your initial investment increase significantly. But don't make that the only reason to own a home.