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 market recently, perhaps you've witnessed a change in our market. Instead of making a low offer on a home that has languished on the market for months (and getting your offer accepted), you might find yourself making a high offer - - - and still being defeated.
Over recent few years, buyers enjoyed huge inventories of bargain–priced bank-owned (REO) and short-sale homes. At one point, less than 30% of the available homes were traditional “non-distressed” properties. BUT… now the number of distressed or “bargain” offerings has shrunk substantially....AND, many more buyers have decided that it's finally time to “take the plunge.”
It’s a predictable cycle: Supply shrinks AND demand (fueled by confident buyers & investors) grows. Values have started rebounding, so the demand to BUY NOW feels even more urgent!
Should you panic? Should you overpay? Of course not! Read the headlines, but don't be controlled by them. CHEAP TALK is seldom accurate. Real estate decisions are often driven by fear: many buyers fear being “priced out of the market” as values begin to climb.
These principles & experiences are drawn from my clients’ RECENT, ACTUAL SUCCESSES.
MYTH: “Cash buyers are gobbling everything up.”
Is that 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.
MYTH: “Nobody can buy with an FHA or 'Low-Down' loan, because it's too restrictive.”
Another fallacy! In fact, plenty of buyers are succeeding with FHA loans, or even more restrictive USDA and VA loans.
MYTH: “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.
One of my website 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.
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: Often, 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 multiple offers, they WON’T send you a specific counter-offer price! At best, they might 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" they are quietly holding back! The odds are that another buyer has 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 later, 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 might be 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 run out and shoot a “video tour?” YouTube isn't just for mindess laughs!
BE READY to be a RIDICULOUS BUYER. This means you can make a decision, write a check, verify your funds/loan qualifications, and submit a purchase offer in a timely, efficient manner. Get to know the purchase & loan process BEFORE the flames are leaping around you, and you’ll be more capable and empowered.
BE READY TO BOUNCE OUT OF BED! Be sure your agent can find you fast. Roy and Sue picked up their phone when I called to say, “I just found THE house,” after weeks of frustration. They were available to view the house and submit an excellent offer within hours - -- the same day it hit the market.
Be sure that your communication lines are clear, and your agent knows how to reach you when things are urgent.
DON’T BE SO FUSSY. Frustrated by low inventory? This might be the wrong time to be too fussy! Your Internet search should cover the broadest conceivable spectrum of home candidates & locations. Shop up to your maximum price, and NOT a dollar below. Evaluate your minimum acceptable home size & bedroom/bathroom count. Do you know that many 2-bedroom homes have a den, office or other “possible third bedroom?” Change your criteria, and maybe your dream home will appear AT ONCE. Consider ALL potential homes that might suit your needs.
GET ALIGNED. If you have a partner in the decision-making process, shop together when possible. Keep renewing your criteria, and be clear about your purpose for buying a home. Respect your partner’s “hard line” limits such as “Absolutely no swimming pools” or “I must have a garage,” and ask him//her to do the same for you.
LEAN ON GRANDPARENTS and babysitters! For many families, home-shopping is better endured by the grownups, alone. Your children might think it's fun to tag along . . . but after awhile, a few tender hearts are going to get bruised, and more than a few parents have told me that they regret putting their kids through the extremes that are sometimes best left for adults. Your investment in a bit of babysitting or “Grandma Time” gives you more time for concentrated, in-depth consideration.
Don't overlook Open Houses and FSBO homes (for sale by owner). AND . . . don't worry about hurting your Realtor’s feelings, because your primary goal is to find the right home! If you drive by a FSBO that looks good, write down the address & phone number . . . your agent should be more than happy to make a telephone inquiry on your behalf. If the sellers don’t want to work with or pay a buyer’s agent commission, so be it . . . yes, you should have professional representation, but there are answers! Your agent’s commission is not more important than your house!
USE GROWN-UP METHODS TO SEARCH FOR HOMES. If you're strictly relying upon the fickle, ad-laden Zillow, Google, or Bing to find homes for sale, you’re missing some winners . . . and experiencing unneeded effort & frustration. Zillow will reveal homes that are heading for foreclosure, but are NOT for sale. It will also show you homes that SOLD months ago! Instead, the most powerful and “real-time” web systems are the tried & true www.realtor.com, and Placer County's agent controlled Metrolist System, www.MetrolistMLS.com, a trade system where all Realtors upload & publish their listings
WANT MORE? Just drop me a line to firstname.lastname@example.org, and subscribe to "Power Buyer Success Stories.” I will not phone, spam, share your address, or otherwise make you regret the request!