Palo Alto Weekly

Real Estate - April 26, 2013

Real Estate Matters

How not to get burned in a hot market

by Michael Dreyfus

Spring is here, and it's pretty clear the local real-estate market is on fire. With inventory low and demand high, houses are selling in record time. Lots of bids, offers way over asking, no contingencies, the works.

If you're selling a home right now, lucky you. You're in the proverbial catbird seat. Even properties with significant flaws will sell in this market, so if you're holding onto a property with an inferior location, an awkward layout or substandard construction, I would highly recommend that you get a For Sale sign up in the next couple of months.

If you are buying a home, all is not lost. You have options. The most important thing to hold onto during these periods when the market is sizzling is your sanity. In the frenzy of getting a roof over your head, don't talk yourself into a flawed location or a bad layout just to get the deal done. Because when the market normalizes, which it will — after 23 years in the real-estate business, I promise it will — the flaw that you convinced yourself you could live with will become glaringly obvious.

You will realize with a sense of doom that you really don't want to live with it. And because the market is no longer as hot as a pistol, you might have to. As I've said to many a house-desperate client: Even if you buy the best of three bad houses, you've still bought a bad house.

So now you're saying, "That's great, Mike, but what can I do? I need a house and I need it now."

I can sum it up in one word. Rent, and wait. I know, I know. It's not what you had hoped for. You want to nest and paint and plant tulips. You don't want to have to move again. You don't like the idea of "just throwing away money" on rent. But I'm here to tell you that in this hot real-estate market, renting may be your best option, saving you from paying too much for an impulse home rather than your dream home. Rent and wait for that right house.

My second piece of advice is to get a really good real-estate agent who you trust implicitly to put your interests first. Do your homework. Ask for recommendations from friends who live in the neighborhood where you want to buy. Interview several agents before choosing one.

You want an agent who is willing to talk you OUT of buying the home with the awkward layout, who will tell you what you are NOT seeing on the market right now, who will say, "Let's blow out of this open house and take a look at that rental." In a hot market, when inventory is low, the temptation is strong to close the deal, but a good real-estate agent will put your interests first, knowing down the line that when it's time to buy, you'll be back, ready to plant your tulips.

PULL QUOTE:

Even if you buy the best of three bad houses, you've still bought a bad house.

Michael Dreyfus founded boutique brokerage Dreyfus Properties, with offices in Palo Alto and Menlo Park, in 2000. He can be reached at mdreyfus@dreyfusproperties.com.

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