It’s a seller’s market, which is great news if you’re putting your home on the market. If you’re trying to purchase a home: not so much. In the mad rush to gobble up the existing inventory, buyers are susceptible to all kinds of bad mistakes. And these wrong decisions can cause buyers to reject your home offer (opens in new tab), or even worse, you may land your 'dream home' and it could turn into your worst nightmare.
Have your hat in the real estate ring right now? These are some of the biggest mistakes that homebuyers make in a seller’s market.
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Trying to get a deal
In any type of transaction, buyers like the idea of getting a great deal or a fantastic bargain. But according to Mihal Gartenberg (opens in new tab), an agent at Warburg Realty in New York, NY, a seller’s market is not the time to search for a deal. “If a buyer wants to close on a home successfully, they should rely on their agent’s advice on how to present themselves and their offer in the best light so it stands out from the other competitors trying to buy the same home,” she advises.
Her colleague, broker Rachel Lustbader (opens in new tab) at Warburg Realty, agrees that this is not the time to try lowball tactics. “Buyers should think clearly about their maximum price point and feel comfortable making an offer at, or as close to, the asking price as possible,” she says. “Furthermore, they should contemplate whether they are prepared to enter into a competitive bidding situation and/or a round of best and final offers if necessary.”
Insisting on an inspections contingency or dragging out the inspections contingency period
Usually, if the home inspection reveals any problems, buyers should ask the seller for repairs or credits. Usually. But in this market, the buyer who asks for no contingencies will probably win the sale, according to Vanessa Dunlap, a realtor at Highland Premiere Real Estate (opens in new tab) in Los Angeles, CA. “However, you will need to know your pain threshold for replacing and/or making repairs on your own before agreeing to a no contingency sale,” she adds.
If you’re buying an older home, Dunlap says you may not want to waive the inspections contingency. However, she says you could reduce the number of days for the contingency period.
“Schedule the home inspection appointment while writing the offer in anticipation that the offer will get accepted so that you can get the inspection started right away,” she advises. “Better yet, bring your home inspector with you while you are touring the home so you can waive the home inspection if everything appears satisfactory.”
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Failing to work with a realtor
Some buyers try to circumvent realtors in an effort to save money. But in a seller’s market, you need all of the help that you can get. “Even if buyers are scouring the MLS for properties that are publicly listed, ideally, they need to be working with a realtor who has a network of off-market properties that might be coming to market soon,” advises Ryan Dalzell, a realtor with the Dalzell Group (opens in new tab) in San Diego, CA.”
“Well-established realtors are constantly checking in with our brokers at weekly pitch sessions to hear about upcoming listings, and oftentimes this jump on the market can allow the buyer to be first in the door with their offer,” he explains. In addition, Dalzell says some realtors send out letters in the community to find potential sellers before they even decide to list their home. “This can allow a buyer the opportunity to make an offer without the overwhelming competition that is the norm with publicly listed properties.”
Not being prepared
With so many potential buyers, sellers aren’t going to wait around while you ponder your next course of action, or try to fix any glitches or hiccups on your end. “The biggest mistake buyers make in a seller’s market is not fully understanding that it is, indeed, a seller’s market,” Lustbader says. “This means that buyers will have to act quickly once they see a home that interests them.
And acting quickly entails more than just making your wishes known. “Buyers need to have all their documents in order, so they are ready to quickly move forward with an offer once they find the home they want to buy,” says Gartenberg.
In other words, you need to have all of your ducks in a row. “When the right property comes on the market, buyers should be ready to jump and to present the cleanest, most complete package possible to convince the seller to accept their offer,” Dalzell says. “This means a current lender pre-approval letter that states that the buyer has been vetted and can perform on the offer being submitted.”
When something arises, failing to be accommodating could cause the seller to favor another potential buyer. “Strive to accommodate the seller by being as flexible as possible throughout negotiations,” Dunlap recommends. “If you don't absolutely need to take possession right away, let the seller know.” Why would that make a difference? If the seller hasn’t find a house yet, she says you can offer to let them lease their house after closing. “Accommodating seller leasebacks are extremely popular in this market, and could be the clincher in a competitive deal.”
Don’t lose hope if you don’t get the first house you wanted – or even the second or the third. “Your real superpower in a seller’s market is to turn up the charm and keep as positive of an attitude as possible - along with your lowered expectations,” Dunlap says. Even if you’re on the losing end of several multiple-offer situations, she advises against getting discouraged, because you might win the next bidding war.