Homebuyers: How To Find a ‘Diamond in the Rough’

Many first-time homebuyers are brimming with optimism about their housing plans. One reason is that more than 75% are young — from the millennial generation or Gen Z.

But real estate analysts say that all shoppers hoping to make a purchase in the new year must brace themselves for tough market realities, akin to those that have faced buyers since the pandemic began.

“Home shoppers should still be prepared for fierce competition, fast-paced sales and affordability challenges in 2022,” says George Ratiu, the manager of economic research for Realtor.com, the home listing company.

The obvious problems: Available properties remain in exceedingly short supply and prices are still ascendant. These factors will likely continue to translate to bidding wars and high-aboveasking-price offers. Moreover, economists are forecasting rising mortgage rates.

Even so, Ratiu says wannabe homeowners remain eager, and 72% of first-time buyers still plan to make a purchase in 2022.

Income-constrained buyers who wish to prevail in the new year may need to take a strategic approach to the competitive market, says Eric Tyson, a personal finance expert and co-author of “Home Buying for Dummies.”

“It’s a cliché, but buyers who seek to score a victory in 2022 need to think outside the box. In hot markets, that could mean considering properties that other buyers have shunned for one reason or another,” Tyson says.

What you don’t want is a house that’s ridiculously needy.

“Rule out a place that would require complex and hugely expensive repairs to the electrical, plumbing, heating or air conditioning systems. Also, avoid a house with serious structural problems or one that sits on a road with trucks rumbling by,” Tyson says.

But beyond these categories of challenged houses, there are other types of superficially problematic properties that savvy buyers may wish to consider, even though they’ve been spurned by rival purchasers. One such stigmatized category includes houses that were overpriced when they first hit the market.

“After sitting unsold for a lengthy period ... the owners eventually drop the price. Yet many buyers remain wary of these shopworn houses, which could translate to opportunity for you,” says Dorcas Helfant, a past president of the National Association of Realtors (nar. realtor).

Here are a few other pointers on spotting a diamond in the rough:

Don’t automatically reject a cluttered place.

Real estate agents often have a terrible time convincing their clients to clear through the clutter that packs their homes. For that reason, many homes go on the market in a cluttered condition — a definite turnoff to most potential buyers.

But sharp home shoppers realize it’s possible to get an excellent deal on a cluttered home, assuming they’re capable of looking beyond the mess to the property’s intrinsic structure and floor plan.

“The idea is to picture the house as if it were vacant and then decide if it has the ‘good bones’ you’re looking for,” says Helfant, the broker-owner of several Coldwell Banker realty offices.

She estimates that at least 60% of the home-buying public can’t envision how different a cluttered home would look if all the sellers’ belongings were hauled away.

If you’re one of that majority, ask someone with clearer vision to stop by the place. This could be an interior designer, a professional home stager or an artistic friend.

“A crowded house can represent an excellent opportunity for you if you can see past all that junk. And remember, the sellers have to take their stuff with them when they move,” Helfant says.

Don’t dismiss a place with personalized decor.

The home improvement shows ubiquitous on cable TV are one reason more owners are now experimenting with eccentric wall colorings and unusual carpet hues. But the strawberry dining room or lime green kitchen that the owners fancy is likely to send many prospects away.

Real estate agents grow hoarse trying to persuade clients to “neutralize” their houses before they go on the market — which often means repainting walls in a light neutral tone and replacing odd-colored carpet with something less flashy.

Just like the cluttered house, the flamboyantly decorated house offers opportunity for people with vision to obtain a property for a very favorable price.

“People with the ability to see the potential in this type of a property can sometimes find a great house for a fair price,” Helfant says.

Don’t avoid a home based solely on photos.

Nowadays, most buyers sift through lots of advertising — both online and print — before agreeing to visit particular properties. If they don’t like what they see in the pictures, they’ll reject properties on that basis alone.

But like some people, some good-looking homes are simply not photogenic. Or possibly the photographers who take their pictures don’t know how to portray them well.

Either way, you could be the winner if you’re willing to visit a home that others won’t tour because of unfavorable photos.

“A wonderful and well-priced surprise could await you when you open the door to a house that others have missed,” Helfant says.