Century 21 In Town Realty
Opportunities can disappear quickly
It is often said that the best lessons are learned during the toughest times. Well, during this, the fourth cyclical downtown in housing prices and sales in the last quarter century, let me share with you some lessons I have learned about living through the housing market doldrums.
First, some of the best opportunities seem to become lost opportunities when we let the fog of doom and gloom cloud rational decision-making. If you want to buy a home because it's that time in your life to put your stakes down and invest in a roof over your head, then waiting for the market to bottom-out may mean missing the perfect opportunity today.
If you are searching for your perfect new home, you should understand that the further away the market is from its last peak the less product there is available in the market.
The lesson? You may not be able to find your perfect home at the best price if you wait too long for the market to hit rock bottom.
The second lesson I've learned during housing market downturns is that you will end up finding the best customer service and the most attentive sales people, developers, service staff, mortgage brokers and all of the other professionals connected with the housing business when times are tough. It's the old adage that tough times never last but good people do. Hungry sales people provide the best service.
The third lesson learned during tough times is that a contract is a contract. You better think twice if you believe that the only risk you are exposing yourself to by walking away from a contract of purchase and sale is your initial deposit on the home you agreed to purchase.
In most pre-sale contracts, you are agreeing to buy a home at a future date regardless of where the price of that home is at when the purchase is to be completed. If you decide that you are not going to complete the transaction you contracted to complete then you should know that you are still generally obligated to the seller for the full contracted value of that home. With most contracts, sellers have the right to pursue buyers and collect the difference between the actual value generated by disposing of that home and the original contracted price.
The same caution about a contract being a contract holds true for developers. Developers are generally obligated to deliver a new home at the contracted price on a specific date unless a contract has specific provisions within it about construction cost escalations or completion delays. A developer walking away from a project before it is completed is no more acceptable than a buyer failing to complete on a purchase when the new home is ready for occupancy.
Let me add one disclaimer to this last lesson. I am not a lawyer and there are exceptions to every rule, just as there are exceptional clauses in every contract of purchase and sale.
There could be specific circumstance and specific contract provisions that provide for deviations from this last lesson. That brings me to another lesson--read the fine print in any contract you sign.
One final lesson learned during tough times in the housing market. A house is a home. You buy a home to live in it. A home is shelter.
It may be the biggest single investment you make during your lifetime but it shouldn't be your biggest roll of the dice. Speculating or gambling with real estate --especially the home you plan to live in -- is a dangerous game.
The housing market shouldn't be a game.
Oh, one more lesson. Through four downturns over the last 25 years, I've learned that the market always comes back. Hold on for the next boom.
Bob Ransford is a public affairs consultant with CounterPoint Communications Inc. He is a former real estate developer who specializes in urban land use issues.
Bob Ransford, Special to Westcoast Homes
Published: Saturday, February 07, 2009