Don’t base your decision on buying a house just off of the listing
“It’s impossible to get that feel when you’re buying a house sight unseen,” experts say buying a house unseen is a bad idea.
Staff Video, USA TODAY
When Madeline Santschi and Wil Moore began house hunting last year, they wanted to buy in Franklin. Initially, the couple said they weren’t ready to compromise, so they rented an apartment together while they shopped for a home.
After continually scanning web sites for available homes in their price range, they began considering areas like Nolensville or the Maury County side of Spring Hill as more realistic options.
“We were at a point where we were ready to buy a home together, but there wasn’t anything on the market for us,” Santschi said. “We wanted to do a new build so we wouldn’t have to bid. We knew we wouldn’t be able to outbid someone because we don’t have all cash.”
Moore added they also didn’t want to have to pay a high price tag for a home that also would require a lot of time and money for upgrades and repairs after the sale.
But they couldn’t find anything in their price range in Franklin that fit those parameters which is a common problem for first-time homebuyers across Middle Tennessee.
Despite home prices escalating to never-before-seen levels in many of the prime locations around Middle Tennessee, there are still more affordable options if you are willing to expand your location parameters.
Jamison Durham is a managing broker with Blackwell Realty and says there’s a real estate industry term called “drive ‘til you qualify,” meaning some buyers have to expand their geographical search area to include homes they can afford.
“I tell my clients to picture a triangle with three points,” Durham said. “One point is the price; one is the location and one is the house. We can pick any two. If you want a great house at a great price, then we have to be flexible on location. If you want an amazing location at a great price, then we are looking at a fixer upper. If you want house and location, then we will pay a premium for that.”
Think outside the box
Steve Jolly, broker with Benchmark Realty and president of Greater Nashville Realtors, advises first-time buyers that if finding a home you can afford to buy in East Nashville isn’t happening, consider going a few more miles north to Madison. If house hunting in Murfreesboro isn’t providing the right options, maybe Shelbyville is worth exploring.
“There aren’t a whole lot of areas left in Davidson County, but the further you get out from the downtown core, the less expensive the prices generally are,” Jolly said. “For a single-family home in Davidson County, it’s almost impossible to find anything less than $400,000.”
It’s basically the same scenario for surrounding counties such as Williamson, Sumner, Wilson, Rutherford and Maury.
“If you want to be in Rutherford County, Murfreesboro is the most competitive market I’ve been a part of in the last 18 months,” Durham said. “If you are looking there, I’d say go to Tullahoma. Look at Shelbyville. You can still get a deal there.”
But Moore and Santschi offer proof that it can be done. They are under contract for a new home in the Harvest Point subdivision in Spring Hill with a projected closing date in April. They got more house than they had initially hoped to find and stayed within their budget of $350,000 to $375,000.
Their advice to their fellow first-time buyers? Look at new construction and expand your search geographically.
“You get more bang for your buck the further out you go,” Moore said. “The location is going to add 10 minutes to my commute, but it was either commute the extra 10 minutes or continue to rent.”
Tips for First-Time Homebuyers
Steve Jolly, broker with Benchmark Realty and president of Greater Nashville Realtors®, offers first-time homebuyers some solid advice when navigating this unprecedented real estate market. In addition to considering outlying areas for more moderately priced homes, he recommends:
First-time homebuyers can get themselves ready to make a stronger offer by getting pre-approved by a lender. Jolly says not all pre-approval letters are the same, but a trusted Realtor can guide a buyer through the proper steps to a strong pre-approval. “Not all pre-approval letters go through the whole underwriting process on the front end,” Jolly said. “You want as much of that done on the front end as possible so there are no surprises for the buyer or the seller.”
“Your agent should get you set up on an auto-notification, so you get notified as soon as a listing hits the market,” he said. Then, buyers have to be ready to go look at a new listing immediately. “You can’t wait until the weekend to go look at a house because it will be gone by then.”
Write a good offer
Jolly advises while looking at a home, gather as much information as possible to help strengthen your offer. For example, is the HVAC unit new or on its last leg? “The offer will be significantly different if HVAC is new versus in need of being replaced. You may only get one shot at an offer, so you need to make sure it’s a good one.”
Choose a trusted agent
A good agent, Jolly says, will talk to a home’s listing agent to see what the seller is looking for in a good offer. They should find out what pain does the seller have that needs to be resolved and figure out how to resolve it. “You can get an edge over other people in the market by being willing to do things other potential buyers won’t.”
Have some ‘gap’ money set aside
If a home is listed for $400,000 and appraises for $400,000, but a buyer offers $425,000, the buyer will have to pay that extra $25,000 out of pocket. “It is common for homes to sell over their list price,” Jolly said. “You may have to have some additional money set aside to cover an appraisal gap if the home doesn’t appraise.”
Consider new construction
Looking to buy new construction removes the potential bidding war and having to arbitrarily offer over asking price to land the sale. “With most builders you get on a waiting list, so when it comes your turn, you either say yes or turn it down,” Jolly said. First-time homebuyers Madeline Santschi and Wil Moore knew they couldn’t afford to get in a bidding war or make an all-cash offer, so they opted for new construction.
Get in the market
Jolly advises it’s better to buy a home that may be smaller than what you might want or even consider a townhome – just to get in the real estate market and out of the rental market. He says it’s beneficial to participate in the appreciation the Nashville market is currently experiencing and is expected to have going forward. “The market went up almost 24 percent last year, so if you bought a $400,000 home you made almost $100,000 in equity. That’s $100,000 you can use as a down payment on the next home. When you sell, you are much farther ahead than the person who has been renting.”
Middle Tennessee price points
Davidson County – $400,000 median list price
If you want to live in: East Nashville
Consider: Old Hickory or Madison
Williamson County – $450,000 median list price
If you want to live in: Franklin
Consider: Fairview or Columbia
Sumner County – $349,900 median list price
If you want to live in: Hendersonville
Consider: Gallatin, Castalian Springs or White House
Wilson County – $341,820 median list price
If you want to live in: Mt. Juliet
Rutherford County – $382,400 median list price
If you want to live in: Murfreesboro
Consider: Rockvale or Shelbyville
Maury County – $410,758 median list price
If you want to live in: Spring Hill
*Median list price data is from Realtracs MLS. These median list prices resulted from a search for active listings in each county that are 3-bedroom, 2-bath, roughly 1,500 square feet in size homes — a good representation of an entry-level home.