10 Reasons Buyers Are Losing out on Homes
by: Jeff Quintin, on March 15, 2021 - Home Buyer Tips
Here are 10 reasons why homebuyers are losing out in our red-hot market.
There’s no doubt about it: Our market is a difficult environment for buyers. With low inventory and high demand, buyers have few options to choose from and an abundance of competitors. However, there are plenty of buyers who are doing themselves a massive disservice by making one (or several) of the following mistakes:
1. Not being aware of just how competitive the market is. They’re not properly educated on the dynamics of our low inventory and high demand, so they’re heading into the market with expectations that are too hopeful. Many don’t realize that the home they just saw could be sold during the time it takes them to drive back to their current home.
2. Not being pre-qualified. Talking to a lender and getting your finances straight is the very first thing you should be doing. Some buyers are shooting themselves in the foot by refusing to talk with a lender until after they look at a property. If you’re purchasing a home with financing, you absolutely must be pre-qualified well in advance. Have that pre-qualification or pre-approval letter in hand before you even think about scrolling through listings online.
3. Not being ready to buy instantly. The market is like roaring rapids right now. If you’re not ready to swim upstream as quickly as you can when you jump in, you’ll get lost in the undertow. When you go look at a property, you do so because your hand is on your hip and you’re ready to pull the trigger.
4. Being overambitious with the terms of agreement. Buyers are including way too many contingencies (condominium review, furniture review, inspection clauses, etc.). The more strings you attach to your offer, the less appealing it becomes—especially when a competing buyer submits an offer that has half as many contingencies as yours.
5. Not making escalation clauses high enough. For example, if you say that you’re willing to pay above a competing offer’s price not to exceed $500,000, but your original offer is for $490,000, then you probably won’t get anywhere. Right now, we have properties selling for $8,000, $10,000, and even $12,000 above asking price even with escalation clauses. Consider getting rid of a cap altogether. Simply state that you’re willing to pay $5,000 more than any other offer.
6. Pushing closing dates out too far. To win the home you want, you have to communicate to sellers that you’re able to close quickly—like, 30 days quickly. That’s the current standard in our market.
7. Asking too many questions at the wrong time. As a real estate professional whose job it is to educate clients, this is a tough one to see. Of course, I understand the need to make an informed decision. That said, having your agent go out and gather information on things like utility costs is a waste of time. Do you want to know about the utilities? Great, just make the agreement contingent upon a review of the utilities.
8. Waiting to review comparable sales. There is a time and a place to review comps. However, you need to know that looking at past sales has nothing to do with real-time value. I know I sound like a broken record, but the market is zoomin’. What went under contract in mid-January is completely different from what went under contract in late February. It’s not about what the last house sold for, it’s about what the last house went under contract for.
9. Not writing offers on backup properties. Don’t be afraid to make an offer on your second or third choice. That way, if the keys to your perfect home wind up in someone else’s hands, you won’t feel demoralized and starting from scratch.
10. Not doing attorney-prepared contracts. You have to have an attorney to prepare the agreement in New Jersey. That way, when everyone signs, it’s over and done. You’re locked in, and you won’t get blown out or find yourself in a multiple-bid situation.
As always, feel free to reach out if you have questions about this or any other real estate topic. I’m happy to be a resource for you and assist with whatever home-buying needs you may have. We want to put buyers in the best position for success. With the right advice from the right team, you can get yourself into a home you love.