Stricter loan requirements and cable TV have helped make purchasers extra picky, experts say.
By Kenneth R. Harney, LA Times
March 6, 2011
Picky, picky, picky. Are today’s first-time home buyers passing up great deals because they insist on flawless “move-in ready” houses requiring little or no changes — even at the starter-home price levels at which shoppers traditionally have been willing to factor future fix-ups and renovations into their offers?
Or are they simply reflecting market realities? They see record inventories of houses sitting unsold, they have plenty to choose from, and they may not have the money, time or inclination to do fix-ups after making the purchase.
Large numbers of real estate agents see this as a significant and perplexing issue that’s having a negative effect on the housing recovery. New research suggests they may be on to something. A survey by Coldwell Banker Real Estate of 300 first-time buyers found that 87% said “finding a move-in ready home is important.” .
A posting about fussy purchasers on the 203,000-member ActiveRainonline real estate network in late February drew strong support from realty agents nationwide. Holly Kirby Weatherwax, an agent based in Reston, Va., who wrote the original blog post, said in an interview that some shoppers are so picky that they walk out of well-priced houses solely because of relatively minor imperfections such as:
•The kitchen appliances are by different manufacturers.
•There are no granite counters — despite the fact that the house is a modest-priced starter home.
•A carpet needs replacing or the color doesn’t match their furniture.
•Wall colors are “wrong,” such as white, when for today’s tastes, they should be a warmer hue.
“They’re missing out on some excellent, older lived-in houses, it’s a shame,” she said, “simply because they can’t overlook” flaws that would not have bothered shoppers during the previous two decades.
Zillow, the Seattle-based online real estate research and data company, suggests any shift by consumers toward greater attention to home details may be an inevitable byproduct of today’s higher down payment minimums and more stringent loan qualification requirements.
According to Zillow researchers, the median down payment in 11 major metropolitan areas has jumped to 20%, compared with “close to zero” in some of the same areas just five years ago. In other words, first-time buyers today often must put a huge effort into coming up with down payment cash, and they want to make sure that equity investment goes into a near-perfect house — one that will need the fewest and least costly upgrades and changes for the next couple of years.
Also, said Zillow spokeswoman Katie Curnutte, shoppers in 2011 “are really in the driver’s seat. Nationally, buyers who purchased homes [in] December paid 4% less than the asking price. That points to a lot of room for negotiating and opportunities for buyers to be choosy.”
Some agents suggest buyers today tend to be hipper and more sophisticated about home design, furnishings, floor materials, counters and appliances because they are exposed to far more information on cable TV than earlier generations of first-timers.
Michael Jacobs, a Coldwell Banker agent in Pasadena, said cable channels such as HGTV “certainly have opened the eyes of more buyers” to design and presentation details. For example, he said, he’s held open houses where young buyers walk in and say immediately, “Oh, this house has been staged” — an observation virtually unheard of in earlier years, when shoppers wouldn’t have spotted the telltale signs.
“HGTV certainly has made these sorts of things more obvious,” Jacobs said.
But constant exposure to cable real estate design shows may also be fostering a lack of realism on the part of some shoppers, according to agents.
Cindy Westfall of Prudential NW Properties in Lake Oswego, Ore., said the shows have “given some buyers the impression that all homes should have granite counters, stainless-steel appliances, etc. There are a few [shoppers who] want all the bells and whistles of that $500,000 house for $200,000, and no amount of talking to them on the realities can change their minds.”
Westfall said she recently worked with a buyer who was interested only in older houses under $200,000 — starter-home pricing territory — but who wouldn’t tolerate the minor imperfections and nicks that older houses typically display.
“The fact is, you just can’t have it all,” Westfall said. “You can’t have the big yard, the top-line updates and all that in a starter home. You’ve got to compromise somewhere or else you’ll never buy anything.”