Don’t lose a home by making these common homebuying mistakes.
I don’t often find buyers committing blunder #1: shopping outside their price range. What I do often find are buyers dissatisfied with what’s in their price range. Occasionally I’ll see buyers cycle between the range they can afford but don’t like, and the range they can’t afford but do like.
But blunder #2, “submitting lowball offers in a hot market”, is more common, even though it’s rare to see a homebuyer deliberately make a lowball offer.
It does happen. I’ll never forget the time I had twenty-seven offers on a home in Sunnyvale, twenty-six of them above list–I’d let everyone know there was lots of interest–and one below. It so amazed me that an agent would waste his time writing an offer doomed to fail that I still remember his name, fourteen years later.
And two years ago I got what might be called a “statement offer”, an offer $3000 (4/10ths of one percent) below list price, from a buyer who knew he was competing with at least one other offer, in a market where homes routinely sold above list. His implied statement? “I won’t pay full price.” He made his point. He also got smoked.
And then there are the buyers who sense, or think they sense, weakness in the market, and want to wallpaper a neighborhood or city with lowball offers so they can get that screamin’ deal they know is out there. In my experience, these “opportunists” finally get tired of constant rejection and end up either paying at least full price or leaving the market.
Lesson: the market is bigger than any one buyer.
Far more common is the unintentional lowball, written by a buyer new to the market, unsure of prices and afraid of “paying too much”. As an agent I can only advise my clients of how much a home is likely to sell for, based on comparable sales. I can’t–and I’m certainly not going to try to–force them to make a competitive offer. I’ve learned that it typically it takes two or three unsuccessful offers before buyers get a feel for value and begin to trust their gut and their agent’s advice.
It’s during this period, when buyers new to the market, full of hope and enthusiasm, are making unsuccessful offers on homes they love and have mentally moved in to, that the agent-client relationship is most at risk. Client is thinking, “why can’t my agent get me a house?”. Agent is thinking, “when will my client figure out what it takes to get a house?”.
Unfortunately, there’s no shortcut around this awkward period. Because very very few clients come in to the market emotionally equipped to make a winning offer on day one. “I don’t want to pay too much” is tough to get past, and “I’m willing to pay what it takes” is tough to get to.
It takes experience, a gut check or three and, yes, a few rounds of failure for people not used to failing. No agent can magically supply that battlefield experience to his or her client, and the hard but essential lessons it teaches.
No, there’s not an app for that.
© John Fyten 2018