1st-time buyers have choices

Buyers can be
overwhelmed by the
number of houses on the market.

MCCLATCHY NEWSPAPERS

MILWAUKEE — After 12 months of looking, trying and waiting, Lisa Solchenberger and Joe Knowski finally found a home to buy.

Last year, they thought they had a house in Milwaukee’s south suburbs, but the seller was unwilling to fix its frayed electrical system, even though it cost him the deal.

Nowadays, sellers are more amenable, and shortly after the engaged couple resumed their search this summer, they found a three-bedroom ranch in South Milwaukee in good shape, with a big kitchen and a tidy yard, for $131,000.

Make that $126,000.

That 3.8 percent discount on the asking price is typical for today’s first-time buyers, despite widespread expectations of bigger bargains in a tired market.

Real estate newcomers are entering homeownership with fingers crossed that their investment will quickly translate to equity, even as financial advisers and real estate agents stress that they are likely to see a return on their investment only in the long term.

It’s a good house for now, said Solchenberger, who needed to leave room in her budget for college tuition.

“And we wanted to make sure that whatever we bought, we could easily sell,” she added.

Beth Jaworski, an agent with Wisconsin’s Shorewest Realtors who specializes in first-timer buyers, estimated that 40 percent of her buying clients this year have been new to the market, a drop from about 70 percent last year.

Many are hesitating, she said, fearful of buying a property that subsequently loses value and worried about navigating the rapidly changing credit arena.

The typical newbie, she said, wants a two- or three-bedroom house that is in top shape and isn’t likely to need repairs in the first year; cares more about price than size or style; and expects to spend up to $250,000 in the suburbs or up to $200,000 in the city.

Even in this spell of stagnant or declining house values, first-time buyers figure that if they have to spend money on a place to live, they may as well own.

Some intrepid first-timers are betting that now is the market’s sweet spot. But will those gambles pay off?

“A lot of people are under the misconception that the real estate market doesn’t go up and down,” said Melissa J. Eckstein, a certified financial planner with MPC Financial Services. “In the Midwest, our prices are more stable than the coasts. That is what leads to the misconception. But prices can still go down.”

A house, she says, is a long-term investment, and that’s the mind-set that she advises first-timers to adopt — even though most intend to sell and move up to a bigger house within a few years.

Meanwhile, the glut of houses can test the endurance of even the most determined buyers, said Ann Lebiecki, a Shorewest agent based in Menomonee Falls, Wis.

Winnowing the possibilities is a chore.

“A few years ago, we could have it done in a couple weeks, and now it’s double, if not longer,” she said of the process of finding the right house.

A stringent set of requirements — location, price, condition — can still return 80 or more properties in an MLS database search, she said.

“They can get overwhelmed. They think they can get that steal of a deal. A lot of them are getting good deals, but not everybody’s getting 20 percent off the asking price,” said Lebiecki.

After waiting out the market — and the birth of baby Hailey — Solchenberger and Knowski plunged back in by looking at 10 south suburban houses.

They attended an auction of a foreclosed house, only to be dismayed when it gaveled down for far more than they thought it was worth.

Monitoring the market, they seized on their house as soon as it popped up. Their offer was accepted when the house had been on the market for two weeks.

Knowski obtained a mortgage pre-qualification. Their offer stuck.

Now, the inevitable costs of getting settled are starting to sink in.

“We have to buy a washer and dryer, new locks and some paint. When will we have time to do all this? It’s excitement and anxiety piled on,” said Solchenberger. “Not having a very padded bank account, it adds to the anxiety.”