After a taxing week of Realtor reality, biting my tongue and playing monkey-in-the-middle, I feel the need to share an insight or two and, perhaps, a little wisdom. I acknowledge this may be interpreted as being paternalistic – and if so, so be it. Moreover, I recognize that writing this is, at least partially, cathartic for me. Whatever the reason, someone needs to be the mature, responsible adult and tell it like it is. We can agree to disagree, if you like. I hope the following hits home for some and causes them to take stock, re-evaluate, consider an alternate perspective and try a new approach.
First, once you’ve made key decisions, stick to them.
No last-minute changes. For example, this means that you shouldn’t change your mortgage application (i.e. joint or single) three days before you close; you will have to re-apply and not all sellers will be forgiving (not to mention, your lawyer won’t be chuffed, either). Don’t apply and get approved for a mortgage as a couple and then expect to be able to be approved automatically as an individual applicant for that same property. You won’t make any friends this way, trust me. Worst case, you will not be approved for the necessary funding and the deal may be at risk of falling through – with the subsequent risk of litigation thereafter.
Second, no flaking out or ghosting.
This is the real world and, where large sums of money are concerned and on-the-line, if you’ve committed to showing up – do just that. It’s simple, really. For example, if you can’t make it to a showing you’ve requested, please let everyone know. Not only is it common courtesy but frees up that same showing time for someone else to view the property.
Third, do not have champagne taste on a beer budget.
Lower your expectations. Be humble and not entitled. For example, it’s best not to make every one of your preferences a ‘must have’ for your first home when you’re trying to get into the market – into the most competitive tranche of the residential home market.
The paradox of the inversely-related, budget-to-expectations relationship never ceases to amaze me; those with the modest budgets seem to have the most unreasonable expectations, unhinged from any sense of market realities. Meanwhile, those with seven-figure budgets often demonstrate far more restraint and a grounded understanding of market realities. Subsequently, there tends to be a far closer, positive correlation with what-my-budget-will-afford to expectations ratio. In the least, it makes for far more rational and enjoyable conversations – not to mention, a more satisfying buying experience.
It must be said that this is where rental companies get people; in my experience, those exploring the idea of obtaining their first property suffer from the golden handcuffs of ‘luxury rental syndrome’. This is my term for the strategy of disincentivizing people to buy by highlighting the contrast between what their current budget provides in perceived living standards renting versus what that same budget would afford to purchase.
Teufelspakt
As in all Faustian bargains, temptation for the hedonistic and/or ego-centric choice will often triumph over the smarter longer-term play of ownership. Don’t fall for it. Don’t sacrifice a richer tomorrow for the meretricious illusion of a more comfortable (i.e., less embarrassing?) today. Be prepared to start small and move up. Be cognizant of your risk of hedonistic adaptation from renting and see it for the true cost it is.
If you approach the housing market from the position of not being entitled to anything, not only will you start to feel far more liberated but you’ll be more open to solutions and learning how to get where you want that much faster. Yes, properties are more expensive than in previous generations but our expectations have grown, also (just look at the average size of new homes and you’ll see my point) – which is the flip side of the coin that’s rarely mentioned. Instead of moaning that ‘my forever home’ is out of reach, plan the work and work the plan. The reality is now that first-time (and often second-time) buyers will need to start very small (almost exclusively in condos now), build equity in any way they can and move several times before accumulating sufficient wealth to position themselves such that they can afford what and where they truly desire.
There is no substitute.
Analogously, not too many people buy a Porsche as their first car – which comes as no surprise to anyone – and the same goes for properties now, too. You can’t expect to go from zero to top-of-the-line in one step. Work hard towards your goal and you’ll get there. It’s simple arithmetic played out over time.
If it doesn’t sound like much fun being a mature, responsible adult… it isn’t. But, it’s often the best way to be to get where you want to be and build wealth along the way.
And then you can relish in the pride that only delayed gratification can bestow.
