Smart Moves

One day, a couple walked resolutely into their real estate broker’s office, declaring they knew exactly what they wanted in a home. The semi-retired pair described their dream house in detail.

But two years later, after on-and-off property tours with Ashley Richardson, their real estate agent, the couple picked a totally different place to what they'd claimed to want.

"I have no idea why this couple went through a mind-boggling change of heart," Richardson says.

Situations like this true story prompt some in the real estate field to invoke the old saw that "buyers are liars." But Richardson insists few buyers deliberately mislead their agents about what they want in a house or can afford to pay.

"People always buy on emotion. When they see a house that gives them a good feeling or reminds them of a happy childhood place, they often respond in surprising ways," says Richardson, who's affiliated with the Council of Residential Specialists (crs.com).

Richard Courtney -- a seasoned real estate broker for an independent firm and author of the humorous book "Buyers Are Liars And Sellers Are Too!" -- says a housing search is a learning process, especially for first-time buyers who haven't given a lot of thought to their ideal lifestyle.

"The main thing is to keep giving your agent accurate feedback about the homes you're seeing," Courtney says.

Here are a few pointers for buyers:

-- Start with a "reality check" involving a solid mortgage lender.

Courtney works in the Nashville area, a music industry mecca. Through the years, he's occasionally encountered want-to-be buyers who are "delusional."

"They come to town boasting about a $1 million recording or music publishing contract. Part of living out their fantasy is to look at some very expensive houses," he says.

Though very few wannabe homebuyers are this far gone, Courtney says most need to see a mortgage lender to set a ceiling on what they can afford. That way they won't waste time looking at properties above their reach.

-- Carefully consider your priorities before you shop for a home.

Once you know how much you can afford, it's time to reflect on your true wants and needs for housing.

Early suggests you retreat to a quiet place, shut off your phone and itemize your priorities (ideally in writing) in a focused way.

"Except for the uber-rich, nearly everyone faces painful trade-offs in terms of affordability. That's because home-price inflation is outstripping incomes," he says.

Would you rather have a three-car garage or a fourth bedroom? Would you opt for a smaller house on a bigger lot or vice versa? These are questions no agent can answer for you.

-- Convey your candid reactions to a trusted agent.

"In rare cases, some buyers are so fearful of hurting their agent's feelings that they tell them what they think the agent wants to hear, not what they really believe," says Tom Early, a real estate broker and past president of the National Association of Exclusive Buyer Agents (naeba.org).

But to avoid swerving off track in the home selection process, your agent needs to hear your negative reactions to properties you don't like.

"Experienced real estate pros can pick up signals about their clients' reactions through their body language. But remember that no one -- not even the best agent -- is a mind reader," Early says.

-- Grant your agent some latitude to pre-select homes to show you.

While you want the agent coordinating your home tour to be guided by your stated preferences, it's also wise to allow the agent some leeway to occasionally include a "wild card." This is a home your agent thinks you might like, even though it doesn't meet all your search criteria.

Agents who are in sync with their clients' reactions can sometimes guess when they'll react favorably to a particular property -- even one that doesn't sound right on paper.

"I'm not surprised anymore when people buy a place that bears little resemblance to what they first said they wanted. They didn't lie. They just changed their minds," Courtney says.

-- Drop an agent who doesn't listen to your wants and needs.

Realtors generally pick up quickly on "buying signals," signs that prospects are seriously interested in a property they're shown. Beyond facial expressions and other body language, couples who like a home soon start discussing furniture placement and how they'd use particular rooms.

But in rare instances, real estate agents fail to pick up on either the implicit or explicit messages conveyed by their clients. Still, Dawn Rae, a real estate broker who works solely with buyers, says an agent who fails to listen to clients should be replaced with an empathic one.

"When an agent keeps showing you the wrong kinds of property over and over, it's absolutely time to find someone new," Rae says.

(To contact Ellen James Martin, email her at ellenjamesmartin@gmail.com.)

In nearly every metro area, home prices are continuing to rise -- a cause for cheer among would-be sellers, but distress among potential buyers.

"Affordability remains a hurdle for renters considering homeownership, especially in higher-priced markets," says Lawrence Yun, chief economist for the National Association of Realtors (www.realtor.org).

Based on the latest available data, the association reported that median home prices increased in 93 percent of all metro areas.

Tom Early, a longtime real estate broker, says that in competitive markets, where multiple bidding is still a factor, first-time buyers are sometimes at risk of overpaying, a mistake in his eyes.

"It's folly to overpay, and you'll be sorry later if you do," he says.

He says it's critically important that buyers inform themselves about local property values before they shape an offer.

"To track values correctly," Early says, "you need to go neighborhood by neighborhood and look at closing prices in the precise area where you're planning to buy."

Sid Davis, author of "A Survival Guide for Buying a Home," says a working knowledge of property values in their target market allows buyers to better craft an offer pegged to the right price point.

"The best thing to do is ask your agent to check on closing prices for comparable homes, ideally for deals done in the immediate vicinity during the last 90 days," Davis says.

Here are a few other pointers for buyers:

-- Go online for guidance, but only as a starting point.

Several websites now provide free information on property values and can prove a valuable resource, Early says. One example he cites is zillow.com, which allows you to search data at either the property or neighborhood level.

"At the minimum, such websites get you into the right ballpark. But don't rely on them totally, because they only give you a general idea of values and nothing more," says Early, who's worked in the real estate field since 1984.

-- Seek out a seasoned real estate pro who knows the turf.

The classic method used by real estate professionals to reach an estimation of value for a property is known as a "Comparative Market Analysis." This technique is grounded in data on recent sales of homes similar to the one being judged.

Your real estate agent should find at least three transactions that are roughly comparable. Then the agent should add and subtract value based on differences between the home you like and the others.

Real estate agents are the first to concede that their judgments on the value of any given property are based on more than data.

"There's a lot of gut feeling to pricing. It's never a perfect science," Early says.

-- Factor in local economic trends.

Property values are always subject to change. That's why Davis says you need to look beyond closed deals to see where values are heading.

"Unlike stocks on Wall Street, it's rare for home values to rise or fall sharply in a few days or weeks. But local economic factors can have a big impact over time," he says.

In a town that's heavily reliant on a single employer -- such as an auto parts plant -- a wave of layoffs could seriously hinder values in the surrounding area. On the other hand, values could be on the upswing in a neighborhood that's expected to benefit from a school boundary change.

-- Seek concessions if you're in a strong bargaining position.

Though a shortage of available homes in many popular neighborhoods is pushing up home prices, there are always exceptions to the rule. For example, a plethora of properties might be available in an area with an above-average level of new home construction.

"In a place where many brand-new properties are coming on the market, you might do well when bargaining on the purchase of a resale home," Davis says.

He tells the true story of how he helped one client -- a graphic artist in her 30s -- to get a good deal on her first home. She'd become enamored of a well-kept condo in a popular community with a low rate of crime.

The data Davis gathered for this client showed that the two-bedroom condo was fairly priced. But his search also indicated a high level of new condo inventory coming onto the local market, demonstrating the woman's strong bargaining position.

Davis ultimately advised the graphic artist to offer full list price for the place. But at the same time, he suggested she seek substantial seller assistance with her closing costs. The sellers readily accepted her request for more than $3,000 in help.

Often, sellers are much more willing to yield on valuable concessions than to give way on price. This helps protect their pride.

"Sellers love to brag to neighbors about how much they 'got' for their house. But when they brag, they rarely admit to the concessions they had to accept to get their place sold," he says.

(To contact Ellen James Martin, email her at ellenjamesmartin@gmail.com.)

Are you a homebuyer who's targeted a popular neighborhood where available properties are in short supply? If so, you could face intense competition from bidders willing to pay more than asking prices to grab a property. Currently, such "low inventory" communities are common.

But in a surprising number of neighborhoods, supply and demand for residential property are now leveling, giving purchasers somewhat more wiggle room than before, says Selma Hepp, chief economist for Trulia, the San Francisco-based online home shopping marketplace.

"If you're moving to an area that's not experiencing a lot of job growth ... you could have a pretty balanced market at this point," Hepp says.

Hepp suggests curious buyers ask their real estate agent to check "days-on-market" data for the community. If it's taking longer for homes to go from listing to sale, that could be a sign of gradually expanding inventory.

Another indicator relates to price. If the margin between asking and closing prices is widening at the sellers' expense, Hepp says that's also a sign that the area could be tilting in favor of buyers.

Tom Early, a real estate broker and former president of the National Association of Exclusive Buyer Agents (naeba.org) says that to take full advantage of a changing marketplace, buyers must be methodical. Here are a few pointers:

-- Begin by determining your affordability ceiling.

It's always wise to ask for an early reality check from a lender on how much you can spend, says Eric Tyson, co-author of "Mortgages for Dummies" and several other real estate books.

After reviewing your income, assets, liabilities and credit history, the lender will calculate your ceiling. Once this is done, you'll receive a letter indicating how much you could borrow for a home.

As Tyson notes, going through the pre-approval process has two advantages. One is you can shop for homes with a set price ceiling in mind. The other is that pre-approval gives you better negotiating power with sellers -- because they'll know you're a sure bet to finance the sale.

-- Define your priority list thoughtfully.

Assuming you're like most buyers, you know what you don't want in a property. But many buyers have focused far less on the features that would constitute their dream neighborhood. And these items can vary widely from buyer to buyer.

"What's smart is to think in the affirmative about what you do want and then shop with that mental picture in mind," Early says.

Sit down with pen and paper and list the qualities of your ideal home. Then rank them in order of importance.

"Would you rather have a huge 'great room' ... or a formal dining room suitable for large family dinners ... ? Nearly all buyers confront trade-offs," Early says.

Thoughtful consideration of your priorities could lead to the realization that your top goal is more living space. Even some retirees with grown children may wish to upsize to accommodate out-of-town visitors, including grandchildren and friends.

Other common priorities involve ownership in a neighborhood with top-rated schools or easy access to a light rail system for hassle-free commuting.

-- Ask your real estate agent to pre-screen homes for you.

Early says one way to shorten your list is to ask your real estate agent to preview properties in person.

"There are limits to what you can tell about a house through online sources. But based on your agent's description, you could scratch some places off your list," he says.

-- Take note of your reactions to the properties you visit.

Because no real estate agent is a mind reader, it's important for buyers to provide continuous feedback on their likes and dislikes to their agent.

But in areas with rising inventory levels, buyers sometimes become bewildered and lose clarity on their own reactions, as you might if faced with dozens of options in the frozen pizza aisle at a supermarket.

One way to help track your reactions to the homes you visit is to use a small notebook to jot down your thoughts after each property tour.

"You don't want to get 'buyer blur,' as happens when people look at too many houses during one outing. Avoid visiting more than about four in one day -- especially if they're very similar and are located in the same development," Tyson says.

-- Keep an open mind on alternatives.

Early tells how after much discussion, a couple of his clients -- a radio talk-show host and his homemaker wife -- made a firm agreement to seek a traditional colonial house and were shown many such properties.

But then Early added a wild card to the mix -- showing them a contemporary with a flat roof, soaring ceilings, a massive stone fireplace and a very open floorplan.

"To their great surprise, this couple loved the modern house much more than the colonials, which had boxy rooms and less open floor plans. The lesson in all this is that sometimes buyers don't really know what they'll like until they see it," he says.

(To contact Ellen James Martin, email her at ellenjamesmartin@gmail.com.)