A listing agent may have shown a prospective buyer a specific house two or three times. Now the buyer wants another showing, which is surely a good sign that she's ready to make an offer. The buyer also tells the agent that she wants to bring her new boyfriend, best friend, out-of-town parents or co-worker with her to the showing.
Well meaning as these confidants might be, they may inadvertently sidetrack the home search or kill off the opportunity for what could have been the perfect home for the buyer. Here's why, and what you can do to avoid it.
You've Been on a Journey -- Without Your Friends or Family
As a buyer, you often go on a journey through the homebuying process. It starts with dipping your foot in the water and feeling out the real estate market. The journey ends with a solid knowledge of the recent sales, the details on the neighborhood or neighborhoods where you want to buy and concrete information on the values and what you should be paying. You may have toured hundreds of homes and even made a few offers before you're ready to buy. But now you are ready and willing to pay the market price for the house and location.
Now you feel it's time to show someone the home you want to buy. You bring in a third party. But here's the potential drawback: Your friends and family haven't been on your homebuying journey. They're most likely not familiar with the market, the current home values or the neighborhood. Without that information, they might instantly think you're paying too much -- and they'll be quite vocal about it. Your well-meaning friend or parents from another state might think your dream home is really a nightmare.
Where First-Time Buyers Should Be Looking
Don't Let These People Derail Your New Home Sale
Population estimate (2011): 709,567
Percent of total sales to first-time buyers with FHA loans: 31%
Median sales price for new and existing homes (Q1 2012): $170,000
Located between Baltimore and Philadelphia, the Wilmington metro had the highest share of total sales made to first-time buyers with FHA loans in the U.S. last year, 31 percent, more than double the 15.3 percent rate at the national level. FHA loans overall accounted for nearly 40 percent of sales in the Wilmington area, compared with a fifth of sales nationwide.
"I think with a combination of lower prices and great interest rates plus a good economic base we have a lot of first-time buyers," said Dave Iliff, an agent at Patterson Schwartz Real Estate in Hockessin, Del.
"They are using FHA as conventional is still requiring at least 10 percent down payment, for the most part, and FHA is much more buyer friendly at (a) 96.5 percent (loan-to-value ratio)."
Population estimate (2011): 303,674
Percent of total sales to first-time buyers with FHA loans: 30.7%
Median sales price for new and existing homes (Q1 2012): $131,500
While every other market on this list has experienced at least a 25 percent drop in home prices from its peak during the housing boom, the Charleston metro never had a boom to bust.
"Being nestled within the hills of the Appalachians can have its pros and cons depending on how you view it. When it comes to the housing market, this isolation is a pro because we don't see much of any type of downturn," said Bret Nida, an agent at Real Estate Central in South Charleston.
"The cost of living here is very appealing. If you would take a three-bedroom, two-bath home with a two-car garage and put it in Northern Virginia, you would pay close to $400,000 depending on where it's located. Here in Charleston, that home is $140,000."
Population estimate (2011): 449,253
Percent of total sales to first-time buyers with FHA loans: 30.5%
Median sales price for new and existing homes (Q1 2012): $118,000
Visalia-Porterville is one of four metro areas featured on this list that are located in the heart of California's agricultural center, the Central Valley.
With 18.3 percent unemployment in March, the Visalia area, like other Central Valley markets on this list, had an unemployment rate more than twice the national rate. Moody's Analytics projects the area will see 1 percent job growth in 2012, below the growth expectations for the nation as a whole.
Not surprisingly, the area has also consistently had one of the highest foreclosure rates in the nation. In the first quarter, the area had the 10th-highest rate with 1 in 89 units receiving a foreclosure filing.
Population estimate (2011): 259,898
Percent of total sales to first-time buyers with FHA loans (2011): 29.6%
Median sales price for new and existing homes (Q1 2012): $107,000
North of Visalia, along Route 99, is Merced, the smallest metro area on this list with just over 250,000 inhabitants.
The housing downturn hit the Merced market particularly hard. The area had the fifth-highest foreclosure activity rate in the nation in the first quarter with 1 in 72 units receiving a foreclosure filing. More than half of the area's overall sales in the fourth quarter (53.9 percent) were distressed.
The area's 20.2 percent unemployment rate is one of the highest in the nation. It is also one of only two metros on this list where the job market is expected to contract, with a projected 0.8 percent decline in jobs this year.
Population estimate (2011): 271,488
Percent of total sales to first-time buyers with FHA loans (2011): 27.5%
Median sales price for new and existing homes (Q1 2012): $145,000
Government-guaranteed loans are hugely popular among first-time homebuyers in the Hagerstown-Martinsburg area, according to Cynthia Smith, a mortgage consultant at Prosperity Mortgage Company in Martinsburg.
Forty-five percent of the first-time buyers in the market use FHA loans, 50 percent use USDA loans and only 5 percent use conventional loans, Smith said.
"Everyone is seeking a no or low down payment program," she said.
Population estimate (2011): 518,522
Percent of total sales to first-time buyers with FHA loans (2011): 27.3%
Median sales price for new and existing homes (Q1 2012): $127,000
As with the other Central Valley markets on this list, economic indicators for the Modesto market tend toward the extreme. The median sales price in the Modesto market peaked at $387,000 in the fourth-quarter of 2005 -- more than 50 percent higher than the national peak that same quarter, $254,000.
Since then, the Modesto area's median price has sunk 67.4 percent, to $127,000 -- the second-biggest decline among the 10 markets on this list.
The Modesto area had the second-highest foreclosure rate in the nation in the first quarter: 1 in 60 units received a foreclosure filing. The area also had the highest share of distressed sales among the 10 markets in the fourth quarter: 61 percent.
Population estimate (2011): 3,318,486
Percent of total sales to first-time buyers with FHA loans (2011): 27%
Median sales price for new and existing homes (Q1 2012): $158,000
First-time homebuyers are "a major force" in the Minneapolis-St. Paul-Bloomington market, according to Aaron Dickinson, a board member of the Minneapolis Area Association of Realtors and a broker associate at Edina Realty in Champlin, Minn.
"Our unemployment rate is far lower than the national average, and unemployment hits the younger generations harder. We therefore are highly likely to have more first-time borrowers with stable jobs and the ability to purchase," Dickinson said.
The Twin Cities market had the lowest unemployment rate among the 10 markets in March, 6.1 percent. The area is also expected to see the highest job growth among the 10 between fourth-quarter 2011 and fourth-quarter 2012: 3 percent.
Population estimate (2011): 5,359,205
Percent of total sales to first-time buyers with FHA loans: 27%
Median sales price for new and existing homes (Q1 2012): $122,000
The Atlanta metro area's median sales price peaked in third-quarter 2006 at $186,000. As of the first quarter, the median was down 34.4 percent, to $122,000, considerably lower than the national median.
"I think for the greater Atlanta area, the downturn was a market correction that needed to happen," said Stacy Carter, associate broker at Better Homes & Gardens Real Estate Metro Brokers in Roswell, Ga.
"Home prices were escalating at an unhealthy and unsustainable rate while at the same time, builders were building new homes from the $400,000s and up, leaving a huge gap in the $150,000 to $250,000 price point for new homes.
Population estimate (2011): 1,251,921
Percent of total sales to first-time buyers with FHA loans: 26.6%
Median sales price for new and existing homes (Q1 2012): $168,000
Art director Diane Kidawa, 38, and her husband waited until the Camden market "settled" to purchase their first home last September in Medford Lakes, N.J. The sales price for their three-bedroom, two-bathroom home was $211,000. They bought it with a USDA loan and a 3.5 percent down payment.
Kidawa's biggest fear about owning a home was not negative equity -- the couple plans to stay in home for at least 30 years -- but rather "staying employed so I can pay for it," she said.
Her husband currently stays at home with their children but is in search of a full-time job.
Maybe You Shouldn't Show the House to These People
Do you have a friend who lives in a brand new home with a designer kitchen and spa-like baths? He might be quick to disapprove of the Formica countertops and knotty pine cabinets you already know need to be replaced.
Maybe you got the house for a lot less than the listing price. Or you and the seller negotiated an amazing credit to replace the furnace, upgrade the old electrical panel or replace the dry-rot filled deck. Chances are, the people you bring to tour the property won't know, care or perhaps even understand these details. They're just seeing a house and a listing flyer with the price. They don't know the history on how you got there.
The point is, think carefully before bringing someone to see the home you're about to buy - especially if the property needs work or is very expensive. Your well-meaning advisers may reignite last-minute doubts and anxieties you'd already worked through. Without meaning to, they can cause you to get cold feet based on emotion rather than reality.
What Should Agents Do?
Real estate agents, especially the buyer's agent, understand this phenomenon and sometimes are conflicted when their buyers ask to bring someone to a showing. It sounds like a huge conflict of interest because most people assume the agent just wants to make the sale. So for an agent to tell a buyer not to show their parents the home would never fly.
A good agent will accommodate and even encourage you to bring someone to a showing. But the agent will also prep you to take what your friends say with a grain of salt. Only the buyer, the seller and the real estate agents involved in the transaction truly understand all the details of the deal and how it got to its current point. Your agent has been on this journey with you, and a good agent will have steered you clear of enough properties to know this is a good match.
Whom Should You Bring?
So whom, exactly, should you take to a final or near-final showing? Ideally, you should ask someone who recently went through the same process. New homeowners will have the details of their search and memories of how it went down fresh in their mind. Their experience may have brought to light issues that you need to think about. Or perhaps they recently had to make a similar decision that you're facing. Ultimately, they'll understand where you're coming from and how you got there.
Your sweet parents who live out of state are probably not ideal advisers. However, they may have offered to gift you money toward the down payment, and of course they'll want to see the house. Depending on how you've structured the deal with your folks, they might even technically be investors. If that's the case, they have some say in the matter, and you should take them to the showing.
Be Clear in Your Intentions
Have you already made your decision, and you just want to share your excitement with your friend? Great. If so, be clear up front by saying something like, "I know you may think this has some issues or you may not love the house, but I do and I know the market really well and the deal is done." It's not that you're closing the door on a conversation; you're just directing it so it will be helpful.
Alternatively, maybe you're bringing someone by because you want approval or feedback. If so, be clear on exactly what you want to ask. Also, think about whether the person is truly qualified to answer your questions. Your dad's uncle Ken, who used to be a handyman for the local elementary school, may be well-meaning and a sweet guy. But is he really the right person to assess the condition of the back deck or the plumbing? Probably not.
A couple in Salem, Idaho, decided to walk away from their home when they discovered that thousands of snakes were slithering in the walls and the siding of the house. Amber and Ben Sessions said they could hear the scales of the snakes against the house and saw track marks all over the place where the snakes would slither.
A man in Omaha, Neb., was living in fear in his own home -- because it was infested with venomous brown recluse spiders. After finding 40 of the dangerous arachnids in his apartment, Dylan Baumann said that he would shake his towels before drying off after a shower, shake his clothes before putting them on and check his shoes before wearing them. Baumann said he plans to move out in September.
A Miami teenager came home to find her father dead in his house, which was swarmed by 60,000 bees. The house was reportedly under renovation, and it was said that the man may have been trying to get rid of the bees when he died.
When Susan Minutillo of Hudson, Fla., ran out to run an errand, she didn't expect to come back and find that her home had dropped into the ground -- after a giant sinkhole under her house suddenly swallowed half of it. Minutillo ran to her neighbors' house, but their home was soon evacuated, too, due to the danger posed by the sinkhole.
After vandals trashed a foreclosed home in Huntington Beach, Calif., an army of mold took over the house, causing $250,000 in damage. Appliances had been removed and water from the Jacuzzi bathtub had been left running. When the water was left to sit, mold grew on the walls, furniture and under tiles.
Brian Dyer intended to dig a hole for a pool in the backyard of his Lakeland, Fla., home. But that hole and two others that contractors attempted to dig were already filled -- with mounds and mounds of trash. Tires, washing machine tubs, debris, metal parts -- even a lawnmower -- were found buried 3 feet under the soil in his backyard.
A pack of coyotes moved into a burned-out and abandoned home in Glendale, Calif. The owners were set to demolish the home and gave the city permission to trap the animals. But the home's neighbors were frightened to even walk outside.
A Palmetto, Fla., homeowner walked into her bathroom to find a 7-foot-long alligator on the floor. Apparently, the gator crawled into the woman's home through the cat door. The alligator was removed without incident -- but the woman removed her cat door.
A man in Dayton, Ohio, said that he was battling 50 to 60 roaches a night inside his home and that they were coming from the foreclosure next door, where the walls were "alive" with them.