A new report from Attom Data Solutions shows that 47 percent of qualified opportunity zones saw median home prices rise more than the national increase of 9.4 percent year-over-year Nearly half (47 percent) of qualified opportunity zones saw median home prices rise more than the national increase of 9.4 percent year-over-year from Q4 2018 to […]
How Buyers Sabotage Their Home Purchase
Running up more debt, buying furniture, traveling the world before closing, taking out a car loan and changing jobs are all big no-nos when it comes to buying. Although many buyers having been counseled appropriately by their agent and lender about what not to do, issues still occur.
What else does a buyer do that can potentially sabotage a home purchase? Here are a few of the lesser-discussed items on the list.
1. Having unrealistic expectations…
We all suffer from this on some level. After all, we are human. Rarely does anything measure up to how we thought it would be.
Sellers often go into the selling process with this attitude, expecting sky-high offers for example, but so do buyers.
Most people have champagne tastes on some sort of budget. For some people, that’s a water budget, for others, it’s a beer budget, and for some, it might be more like craft beer or fine wine.
No matter the price point, buyers are likely to wish that the properties they are seeing had more or less of something, weren’t so close together, or have more space, privacy, backyard, upgrades, etc.
It can be easy to see the glass half empty when every property they look at comes up short in some way. Balancing market realities with the price point that they can afford is important.
Our job is to make sure our buyers keep their grip on reality and know what to expect.
Let’s face it: We know that buying a home is the single largest transaction that people make, and it can be hard for buyers to pull the trigger, even when what they want is staring them in the face.
Maybe it seems like too much of a stretch financially, or they weren’t expecting to find the perfect home so early in the process. Maybe they worry about what else might come on the market and if they’d be overpaying by pulling the trigger now.
There is a saying in real estate: “He who hesitates, misses out.” There is often a short window to pull the trigger when buyers come across “the one,” especially if it has just hit the market. After that, all bets are off, and multiple offers are often the reality.
One way to combat this is to prepare buyers for the need for quickness by showing them how quickly homes that are similar to their “dream” home are selling. Armed with data, this reality check might just be what your buyers need.
3. Comparing everything to the one that got away…
This is a follow-up to No. 2. If buyers hesitated to pursue the house they really liked, almost invariably, they’re going to compare everything else to that home, and nothing may ever measure up.
Subsequently, the market is going to pass them by with other opportunities. Prices and interest rates might go up, and suddenly, the options that were there seven months ago don’t look so bad compared to what they are seeing now. The problem is, they can’t hit the rewind button.
Buyers need to get off this merry-go-round, focus on the possibility of properties to come rather than those that are no longer on the market. In the grand scheme of real estate karma, it wasn’t meant to be. Also, let buyers know that they might be idealizing the home a bit. Things often look much rosier on the first showing, and then on the second, you see the bumps and bruises. Every home has them.
Every home has flaws — both new construction and resales alike. There is a difference between major defect issues and things that can be lived with, changed or improved.
In the HGTV/DIY era that we live in, there’s nothing that can’t be transformed on some level. All it takes is money, and there are smart ways to use that money to achieve the look for less.
Buyers who continually nitpick, scrutinize and question every little thing in a house risk missing out on properties that could be right for them.
Ask buyers if the items they are nitpicking are truly barriers to moving forward or if they can be remedied. For example, are the hideous paint color and worn carpet absolute deal-killers?
Also point out that the so-called issues are opportunities to negotiate favorable terms with the sellers. And when a decent option comes along, focus on the features that you can’t get with every property. The home with a view that needs some updating might be better than something that is updated with no view.
5. Looking too much…
Along the lines of hesitating and nitpicking, there can be a problem with looking too much.
If buyers look at numerous homes, they might become numb to the available inventory and will find fault with all of it. Nothing will be appealing, and they won’t feel any real sense of needing to make an offer. It will simply be more of the same.
6. Trying to time the market…
If real estate agents had a crystal ball, we’d be in the prediction business, not the real estate business. Although there are certain times that are better for selling a home, trying to time the market as a buyer is nearly impossible.
When buyers make the decision to buy, they plug into the market with what’s on the market now and roll along as new properties become available.
Granted, properties are likely to command a higher price in the spring and summer months, depending on the market, but the selection of inventory is also greater, which affords more choices.
Hence if buyers get outbid on one home, they have a good chance of being able to find something else relatively quickly, as opposed to if they were hedging your bets on buying toward the end of the year because they think sellers are more eager to sell.
They could risk having less to choose from, and they might overestimate a seller’s willingness to negotiate for the same reason. Their home might be one of the very few on the market in their price range, so “timing the market” is actually a bad deal all around.
7. Making low-ball offers…
It’s been said before, but it bears repeating again: Making unrealistic low-ball offers is not the way to score a house.
Buyers risk alienating the seller, leaving the door open for other offers and, ultimately, losing out on what they want. If it’s a house they are lukewarm about, then they shouldn’t bother wasting everyone’s time.
The chance that they will catch the sellers on an “off day” and they will agree to sell their home for substantially less than it’s worth is jaded thinking.
If low offers are going to be part of the strategy, no mater what they buy, the notoriety gained from doing so in local real estate circles might prevent them from being able to successfully lock up a deal.
Here are a few strategies for working with buyers who insist on making low-ball offers.
8. Asking for far too much…
Speaking of low-ball offers, there is a balance between what is reasonable and unreasonable in a negotiation. Make sure buyers’ requests won’t shut down a seller’s willingness to respond in the first pass.
Going in with a low-ball offer and expecting sellers to make every repair plus make concessions and pay closing costs will have buyers back at square one.
Conversely, don’t attempt to ask the seller to throw in the barstools, couch, outdoor furniture, television, etc., as a matter of courtesy once the contract is executed. Sellers aren’t inclined to leave things for free unless it’s something that buyers probably wouldn’t want. For more strategies on making reasonable repair requests, click here.
9. Being inflexible…
Buyers who make one-way offers and insist on a particular set of terms or a specific closing date or else “no dice” won’t get very far with the home purchase process.
Having a flexible attitude and being willing to compromise is a must. The real estate search and transaction itself is riddled with twists and turns, and many things don’t go according to plan.
Curveballs are always part of the process. The ability to adapt and function from a position of give-and-take is a must.