Want to be a Powerful Buyer?
Are you hearing about (or enduring) the experiences of frustrated or thwarted homebuyers? If you just got into the low-priced or mid-priced market in the past few months, the chances are you've witnessed a radical change in our market. Instead of making a low offer on a home that's been on the market for months (and getting your offer accepted), you might find yourself making a high offer and still being defeated.
Over the past few years we had huge inventories of bank-owned (REO) and short- sale homes. At one point, less than 30% of the available homes were traditional “non-distressed” properties. BUT… lately, the inventory of local bank-owned homes has shrunk to barely HALF of last year’s levels … and the number of buyers who've decided that it's finally time to “take the plunge” has increased!
We’re seeing a predictable but maddening economic cycle…one in which supply shrinks AND demand (fueled by confident buyers & investors) grows. Values have stopped sinking, hence the demand can feel even more urgent!
Real estate decisions are often driven by fear: at the moment many homebuyers are in fear of being priced out of the market as values begin to climb.
Should you panic? Should you overpay? Of course not! TALK IS CHEAP, but not necessarily accurate:
“Cash buyers are gobbling everything up.”
Is that really true? In our immediate area, no more than 30% of all closed sales reflect all-cash purchases. This is a higher-than-usual percentage, but it still leaves lots of room.
“Nobody can buy with an FHA loan, because it's too restrictive.”
Another fallacy! In fact, plenty of buyers are succeeding with FHA loans, or even more restrictive VA (Veterans Administration) loans.
“Every home sells with multiple offers above the asking price!”
Once again, the numbers don’t prove this out. Certainly, homes are selling faster, and the average sale price is nearly 100% of asking price. BUT… at the most, around 25% of all sales are “Over Asking Price,” and often just 1-2% over.
For nearly 8 years, I’ve received a lot of readership at my website. One of my articles, “How to Buy Low,” is packed with lengthy advice about being a strong buyer: Make your offer quick and complete - - - package it up with a strong earnest money deposit and a lender's preapproval - - - and only ask the bare minimum inspections or concessions from the seller. BUT… the new challenge isn't merely “How to Buy Low,” but perhaps “HOW TO BUY AT ALL!” Read on!
A Few Power Buyer Principles:
BE FIRST NOT LAST: sometimes, the early bird does get the worm. If you pounce on a property with an immediate offer, it will help your chances of success.
HIGHEST & BEST OFFER: This means, “Don’t Hold Back.” Embrace this annoying concept. If you're crazy about a property, the chances are very good that someone else will be, too. If the seller receives many offers, they WON’T send you a specific counter-offer price! Rather, they’ll send one counter offer to multiple buyers, asking everyone to submit their “Highest and Best,” then they’ll choose one.
This is tough, but we just have to get over it! Just as the other buyers are doing, search yourself and require that your Realtor provide you with abundant, relevant research so you can truly establish the highest price that you’ll pay.
Buyers can't play games and hope sellers will come back and ask for the little bit extra that you’re secretly holding back! The odds are that someone else will have already offered that amount, and you'll be left crying in your beer one more time.
THINK “LONG,” NOT SHORT. One of the biggest mistakes homebuyers made during the pre-2006 “Ridiculous run-up” was to think of their home purchase as a short-term investment - - -“We can always sell it for a lot more.” The fact is, you can only safely buy what makes sense today. You’re buying a HOME for the long haul.
Don’t buy out of fear! God gave us adrenaline for a good reason, and fear can be a great reaction to threats! Screaming at an approaching mountain lion is a brilliant idea, but overreaching or rushing to buy a home - - - out of fear that home ownership is about to escape your reach - - - is not! Such decisions are seldom in your best interest. Instead, think long and hard (about six hours, that’s plenty :-) about what's most important, and whether you can manage a home’s price & condition in the long haul.
ASK YOUR AGENT FOR RIDICULOUS SERVICE. There are a dozen examples, here’s just one for the moment: If your dream home hits the market while you’re out of town, why not ask your Realtor to send you a “video visit?”
BE READY to be a RIDICULOUS BUYER. This means you can make a decision, write a check, verify your funds/loan qualifications, and sign a purchase offer in a timely, efficient manner. Get to know the purchase & loan process BEFORE the flames are leaping around you, and be more capable and empowered.
The Power Buyer Principles begin September 14, and will grow quickly. I have dozens of real-time, local SUCCESSES to share … and they will help you!
Just drop me a line to email@example.com, and ask to receive "Power Buyer Success Stories.” I will not phone, spam, share your address, or otherwise make you regret the request!