The Expert Podcast

How many times have you seen headlines like this either on your local news, in the newspaper, or online, where buying a house is frustrating? Used to be that buying a house was a happy experience. You shopped around, you looked at four or five houses, you found your dream home, and you purchased it. The hardest part was maybe getting all your mortgage paperwork approved. Now, it's even finding a house. These articles both come from Texas, which you might think is an easier place to buy a house. In actuality, it is. There's more inventory in Texas than many parts of the country.

One couple was interviewed saying buying a home in DFW was a demoralizing experience. Well, how demoralizing? Well, another couple were bawling. They offered a hundred thousand over list price on a house and got rejected again. So it wasn't the first time this happened. So this is a bring-you-to-tears crying event buying a house in many parts of the country. What's the solution? How do you get past this? Well, it's actually not that hard to solve this problem, and you've probably seen it on our website at homescheep. Some of the answers for this: first of all, let us know in the comments what are your experiences of trying to find a house to buy, trying to find inventory.

One solution is to focus on a different segment, like tuning into a different radio station. If everybody's looking at the sweet spot of price range and type of house right now, it's about 400 to 450 thousand, depending upon what market you're in. Some parts of the country, 450 thousand gets you nothing, like in South Florida, Southern California, and parts of Washington State. You have to spend seven or eight hundred to get any kind of a house. But whatever that sweet spot is for a house where everybody's targeting, look at a different sweet spot. If you can afford it and you can get approved for it, look a little bit higher. If you're in a market where most of the houses are 400 to 550, look at an 800-thousand-dollar house. You'll get a lot more house if you can afford it, and there may be fewer people competing on that house. On the other hand, if you don't want to go that high, shift down a little bit to maybe the 200 or 250 range. It may not be the exact house you want, but could it be turned into the house you want?

Is the difference just cosmetic? Is the 250 thousand-dollar house the same house as the 450 thousand-dollar house, just with an outdated kitchen and old flooring? Well then, buy the 250 thousand-dollar house and spend 50 grand updating it or even spend 100 grand. Look, the couple in the last article offered a hundred thousand over listing price to try to get the house. What if you bought a house that was a peg or two lower and put a hundred thousand in it to fix it up to your liking? Maybe you need more space. Buy a smaller house and spend 150 on adding more square footage to the home.

Every single market, every single market around the country, has a multitude of homes that are 200 thousand dollars or less, many of which have been on the market for months. The home in its current condition is not going to be the way that you want to live in a house, guaranteed. However, if it takes you six months to buy and fix it up to get it to your liking, that may be quicker than waiting for the magic house to show up that you can buy turnkey. And it probably will be cheaper. What you have to do is kind of get over your internal pride of buying an old beat-up house. That's the problem. But is that a long-term problem or short-term problem?

If you buy a house today, even at five and a half percent for two hundred thousand dollars or 250 thousand dollars, and you put another 100 or 150 into it, or even 200 thousand dollars in it, now you're into the house for 400 thousand and in six months, you have exactly the house you want— even probably more of a dream house than if you try to find something turnkey. Because one person's dream house isn't exactly the same as somebody else’s. Nobody's gonna have the exact type of requirements or desires for a house that you do. How many home shows have you watched, and the person says, "Well, I like this house, but here's a few things I don't like"? Every single house is going to have something you don't like anyway. So buy one that has nothing that you like except for the location and maybe the lot, and make it into what you want. It'll be cheaper in the long run.

It'll be very aggravating because you have to go through the building process: dealing with contractors, dealing with permits. Is that more or less aggravating than the home buying process? I don't know. People are reporting breaking down into tears buying a house. How much worse could it be having to fix one up? I don't know. Can't be that much worse, and you have a house exactly how you want it, the way you want it, and you can do it at your pace.

Now, the other thing you have to get over is you have friends, you have relatives, that are going to see your house in the condition it is when you buy it. You may have to swallow your pride for six months until you get it the way you want to, but are you living for somebody else's life or your own? I don't know. In the long run, in a year or two down the road, you'll have a lot to show for it. Not only will you have a house the way you want it, but you also have the satisfaction of knowing you accomplished that project. All your other friends and relatives have bought a house; they bought it the way that it came, and that's their accomplishment. You exceeded that by going through the building process. You may have naysayers, you may have doubters, but that'll be impressive and admirable as something that you're able to do. If nothing else, you'll save on the interest rate because the interest rate you get today, even at five and a half percent, is less than what it's going to be a year from now. It'll probably be close to seven a year from now, so you'll save a point and a half on interest for the rest of your 30-year mortgage by buying something today.

Not only counting saving on price, a lot of people are waiting for prices to come down, trying to wait out the market. You know, we've said before we don't think that's going to happen. There may be a little bit of a pause in the uptick, but the prices probably won't go down. But that's up to you to decide if you think that'll be the case. But either way, even if it's just for entertainment, check out our website homescheep.com. Look at the houses that are for sale for 200 thousand dollars all over the country, near the beach, in the mountains, with acreage, with square footage. We have one recently we did with houses over five thousand square feet, and you can consider these as an option of getting into a home that you own. You don't have to worry about the rent going up, being evicted. That's your property to do what you want with. Hang the pictures where you want, run in the yard the way you want.