“Don’t purchase an Orange County home on credit (Finance) with money you don’t have to impress people you don’t know” Greg Steinaker, CEO BanCorp Real Estate Group. Recently it was reported that Americans put $1,300 on credit cards for every $1,000 they earned! This is just another way of saying that American are buying things that we can’t afford with money we don’t have to impress people we either don’t like or don’t know… We wonder why our government is in trouble? Our nation’s population is in trouble! One of my favorite quotes is: “If the grass is greener on the other side of the fence – so is the water bill.” Ever since I became the C.E.O. of BanCorp Realty I have never had to worry about my yacht having barnacles on it, you know why? I don’t own a yacht. At BanCorp Real Estate Group, when we are representing a client, if we believe they are stretching their finances and buying more of a home than they can afford (regardless of what their lender might say) we will say so. If we didn’t, would we really be a ‘real estate professional?’
Just because the bank says you are qualified does not mean that you and your family should jump up two or three levels in the housing hierarchy. It doesn’t mean that you shouldn’t either. BanCorp simply wants to bring to your attention that just because the bank says it is “good go” does not mean that you need to automatically accept their offer. The bank makes their decisions on historical information: How have you paid your bills in the past? How much have you earned in the past? How much have you been able to save (past tense)? The bank can’t foresee the future of your company or your business and neither can you. If you know that your company is experiencing layoffs on the East Coast and the rumor is that they might start on the West Coast in a year or two shouldn’t you factor this in to the equation of whether to upgrade two-steps into a home? The bank doesn’t know this, but you do! If you are self-employed and think this is going to last forever, might I just remind you of the end of 2007? 2008?
BanCorp Realty is not trying to scare you away from moving up into your next home, quite the opposite. BanCorp is in the business of “Homes | Families | Dreams”. If you are not moving forward, you are either stagnant or moving backwards (there is no other way to move). The point of this blog is to make a wise, prudent decision when you decide to trade-up one or two homes in the Orange County property hierarchy. We have seen too many instances since 1995 when a family had a stellar couple of years income wise, thought it was going to last forever and went crazy with their next home only to have to sell the home shortly after buying it because their income adjusted back to closer to normal after moving into their new dream home. I will provide a quote from a person that knows a little bit about smart investing, Warren Buffet “Don’t lose what you already have”, this is his rule #1-A. If you have built up equity in your existing home and are ready to trade-up, don’t take the chance of burning up this newly acquired equity with Realtor fee’s by buying and then having to resell a new home quickly. Just because the bank says “Okay” does not mean that you need to follow suit. You and your family make the final decision, and remember you are the ones that are going to make the payments, the bank that said “Go For It!” will be the same ones making collection calls on the other side of the phone.