A great question came into the “Ask the Broker” inbox this morning:
We are moving to Tempe next year (May-June 2011) and have found your site and blogs very useful… and entertaining as well! Thank you!
We wanted to buy immediately, i.e. not rent while we look around for a suitable house. Is this a feasible strategy in this market? and if so, when should we plan our first visit?
Our plan was to
1. Short-list online properties we were interested in and set-up viewing appointments
2. Visit in the early part (?) of the year and choose
3. Get all the paperwork done so we can close and move-in when we arrive in May/June
From reading your website, It seems like this would rule out everything but a traditional sale.
Will this work or could too many things go wrong and would you advice to rent and look around while in the area. Any information you can provide would be helpful.
First, thanks for the kind words. I’m glad you find this a useful and entertaining place!
Here are my thoughts”¦
It probably goes without saying that relocating and purchasing a home are two things WAY up the list of “High Stress Activities”. If you go shopping and buy the wrong size shoes, a bad suit, or food your kids won’t eat, that’s not such a big deal.
Buy a home in the wrong area for you though, that is a big deal.
Ideally, we recommend that if you are relocating and not familiar with the Phoenix metro area that you rent first before you buy a home.
The benefits of renting first:
- You get familiar with an area before making the home purchase plunge.
- If you don’t like where you end up renting, you can rent somewhere else. Or at least drive around different areas at different times, watch listen and observe the local area and news ”“ basically get a long term, in-depth feel of different areas.
- Less initial cash outlay. Moving is expensive, even if you have corporate relo assistance.
- Home prices are still dropping. Sort of.
- It is much easier to work out timing issues between leaving your existing home and relocating to your new one. Closings are delayed all the time.
- Reduced stress. Maybe.
The disadvantages of renting first:
- You have to move multiple times. Let’s face it, moving sucks. Ever meet anyone that likes to move?
- If you have children, unless you rent in the same school district you ultimately purchase in, then the kids may have to switch schools. Again.
- Interest rates are at historic lows. They can’t drop much more. They could rise while you are in your rental.
- You have to move multiple times.
- Short term leases aren’t easy to find. You may be locked into a six month lease. Or more.
- You have to move multiple times.
So answering the question posed is difficult. Ideally, you probably want to rent first. But we don’t live in an ideal world.
The questioners plan is pretty solid. They need (I think) to know a few things to really nail down their nest steps.
Plan on it taking at least 45 days to close on a home purchase from the time you get an accepted contract. (Assuming you are financing. You can close in 2 weeks or less with cash).
This begs the question, “how long does it take to get an accepted contract?” In a “traditional sale” (not a bank owned home or short sale) you can often get a seller’s response to your offer in 24 hours. In a multiple bid scenario, add several days. Add several days for counter offers and negotiations. Bottom line though is in a traditional sale, you get answers pretty quickly.
How about bank owned homes? Here it’s a bank, and their bureaucracy you have to plan for. Many REOs (Real Estate Owned, aka bank owned homes) in the Phoenix market get multiple offers. But you can still usually get a yay or nay on your offer within 10 days or so.
Short sales? Good luck. Lenders seem to be getting faster in some situations, but they can still take months (yes months) to grant approval for a short sale.
Be sure to have an “LSR” (Loan Status Report) from your lender before you plan to submit an offer. The LSR is basically a loan pre-qualification that is all but required to be submitted with the original offer.
Determine what you will do about the inspection period. In Arizona, the standard inspection period is 10 days, beginning at midnight after contract acceptance. Being out of town complicates things, but not unduly so. You just need to understand your options (return for the inspection, don’t return and rely on inspectors report, agent feedback, photos and video, etc).
If you’ve narrowed your possible locations to just Tempe, that is beneficial in many ways. But are you sure you want to exclude nearby areas?
The more time you can spend here, the better. It is *great* if you can drive around the areas you’re looking at different times of the day. Drive the route you’ll take to work ”“ at the time you’ll be going to/from work. Get a feel for the neighborhoods. The better feel you get for where you’ll be living, the more comfortable you will be throughout the home buying process. And beyond.
If you can only make one trip however, all is not lost. We’ve helped people relocating that had ONE DAY for a house hunting trip and had NO IDEA where they wanted to live. It makes for a brutal and rather unpleasant day, but it can be done.