DEMAND FOR REAL ESTATE PUTS SQUEEZE ON FIRST-TIME BUYERS
By Debi Boucher Stetson
The Pennysaver

The Cape’s hot real estate market presents real challenges for the first-time home buyer, who find themselves in competition with more experienced -- and more monied -- buyers for a dwindling number of properties. But first-time home buyers can be successful in this market, local REALTORS® say, if they stick with it. Two things they must remember are to be prepared and to persevere.

Being prepared means being prequalified for a mortgage. Dick Eble, co-owner of Coldwell Banker/Atlantic Realty in Brewster and Orleans, said it’s very important for first-time buyers to visit a bank or mortgage company before shopping for a house, not only so they know what they can afford, but so they can be ready to make an offer once they find a house they want. Properties, especially those in the lowest price range, are moving fast once they hit the market and buyers must be ready to move fast. Eble said one house he knows of was placed on the Multiple Listing Service at 4 p.m. one day, and by 6 p.m. the broker had already received two offers.

Which brings us to bidding wars, a byproduct of the Cape’s lively -- and competitive -- real estate market. Novice buyers should not despair; they may often emerge triumphant in such situations, even if their bid is not the highest. Here again, being prequalified can put them at an advantage. Eble told of one young couple who wisely got themselves prequalified for a mortgage, and wound up the proud owners of a home that another couple was also after. The difference was that the other potential buyers were not prequalified. “They took the young couple because they had done their homework,” Eble said.

But another couple, also first-time home buyers, have not been as fortunate. Although they were qualified for a mortgage, Eble explains, it was a VA loan with no money down. The couple lost out on three different houses because in each case, the sellers did not want to wait for the money to come through. “They ended up competing with other buyers, even though they were approved.”

Shopping for a home, however, can be a long and rigorous process for first-time home buyers these days, because they generally need to find something on the low end of the price scale and there’s not much there these days. Demand is high, prices have risen, and anything affordable gets snapped up quickly. “It is tough to find something under $150,000,” Eble said. But there are occasional buys to be found in the $130,000 range. “I just found, for a young couple, a two-bedroom, two-bath in Brewster for $129,900,” he said. The house is on three-quarters of an acre not far from the bike trail on Millstone Road.

The situation is much the same on the Upper Cape. “Listings we’ve had for under $130,000 have been very hot,” said Jamie Regan, owner of CENTURY 21 Regan Realtors in Mashpee. He advised first-time home buyers to be flexible in terms of the properties they will consider. “It's not their dream home, it’s their first home,” he stressed. “They shouldn’t be afraid to roll up their sleeves and do some cosmetic work,” he said, explaining that while it is important to be sure the house is in sound condition, things that can be easily altered, such as dated paneling or a bad paint job, can bring a home’s market price down considerably. First-time buyers should also consider grabbing a house that has some problem that makes it less then desirable to most buyers, such as electric heat. “Negotiate.” Regan said. “Don’t discount it because its got some little problem.”

To potential first-time home buyers who may be on the fence as to whether to try to buy now or wait and see what the market will do, Regan has these words: “Go for it. In this competitive market,” he said, “properties will soon be gone.” “I would rather see someone get into home ownership sooner rather than later,” he said, noting there are many advantages to home ownership. “First-time home buyers we’ve sold to in the last five years have some exceptional equity,” he noted.

And with the rental market perhaps even tighter that the sales market, he said, it is often cheaper to buy than to rent. At the going rate of 7 percent, a $100,000 loan translates into monthly mortgage payment of about $700 compared with the average rent of close to $1,000, Regan said.

There are tax advantages as well, said Eble, “With the tax advantages the government gives you on mortgage interest, you can recoup 30 percent of your housing expenses, so it is better to own than to rent.”

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