First-timers often focus fears on wrong questions

The only thing buyers need fear is fear itself. (Flickr photo by juanpg)

It is a fear that I have a felt myself: Buying real estate is scary.

However much anxiety that the process plagues first-timers, the fear seems to all but disappear with subsequent purchases.

Although it is incumbent on any buyer to assess the risk, it also is true that much of the fear is misplaced.

I know that I, for one, always will regret my failure in the 70s to make an offer for a one-bedroom, two-balcony co-op in the distinguished San Remo on Central Park West.

The price then was something over $40,000.  I won’t allow myself to be any more depressed than I already am on the subject by researching its current value, but I sure wish we had bought the place.

Fear held me back then and cost me countless hours of sleep when we finally bought a weekend house for a song instead.

Could we afford it, should we commit to it, what if we lose our jobs, how will we know how to maintain it?  If you’ve purchased or considered purchasing real estate, you know the sort of question that is bound to haunt you as well.

In my view, the most troubling of all questions usually is posed like this: Should I be spending so much money?

Spending?  That’s usually not the best way to look at buying real estate, which is nothing like buying new furniture, new electronics or even a new car.

When buying real estate, we’re not spending money: We are moving it from one kind of investment — usually stocks and bonds — to another.  Although I preach that purchasing a home is about buying shelter, we’re not just consuming something that will be used up or become obsolescent.

If buying a home is not also investing in the hope of enjoying price appreciation, there would be every reason to keep renting.  Yet I’d be a fool to suggest that you can’t lose money by investing in real estate; millions have done so.

At the same time, I’d be wrong to contend that investing in a new home is a foolish expenditure.  For those consumers who have steady jobs that can assure enough funds to make monthly payments, a bright outlook and a strong sense of responsibility, buying a new home makes sense.

What I left out of the preceding paragraphs is the principal disadvantage of purchasing real estate: It is an illiquid investment.

Obviously, you cannot just call your broker and turn property into cash overnight.  So, the most important question for prospective new homeowners to ask themselves is this: Can I hang onto the place as long as it takes to sell it for a reasonable amount of money?

To be clear, I don’t mean to advocate the idea that it is better for everyone to own rather than rent.  That would be irresponsible.

What I know is that there is a complex equation to be solved in making the right decision.  But I believe that asking whether it is wise to spend the money places undue emphasis on doubts that hardly need to be considered.

Tomorrow: O Cambodia

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Malcolm Carter
Licensed Associate Real Estate Broker
Senior Vice President
Charles Rutenberg Realty
127 E. 56th Street
New York, NY 10022

M: 347-886-0248
F: 347-438-3201
Web site

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