Like most things in life, the real estate market fluctuates. Most recently, we have been experiencing a strong Seller’s Market but the tide will inevitably turn. Even financial experts have difficulty predicting when conditions will change, so how is the average buyer supposed to use market conditions to his or her benefit? The secret is to be prepared ahead of time.
Here are five mistakes that buyers often make and how to avoid them.
Working with an inexperienced agent
In a seller’s market, it benefits buyers to get all the help they can. If you have a knowledgeable and experienced agent representing you, you have a better chance of successfully purchasing the home you’ve always wanted. A professional realtor will help you streamline the process of locating and viewing properties and can prepare you to act when you find the right one. They know the area, the market and the ins and outs of the process, saving you time and stress. Buying a home is one of the biggest financial transactions you will ever face. Make sure that you are represented by a capable professional.
Taking Too Long To Act
Obviously, buying a home on impulse is risky. By the same token, over-analyzing a purchase during a seller’s market is ill-advised as well. When you wait too long, you run the risk of losing out on the property you love. If you have properly prepared for your purchase you’ve already determined the type of home you want, the location you’d prefer, and your price range, so if you’ve been lucky enough to find a home that meets all of those qualifications, don’t wait to make an offer. To give yourself more leverage, be prepared to move quickly by having your finances in order — get a preapproval. Ideally, you’ll know how much you can truly afford, repair any credit issues and have your down payment ready. Visit your lender as early as possible in order to be prepared from day one.
Not making your best offer
Most of us would love to buy what we want for as little money as possible. It’s human nature. It follows then, that when most people see the listing price of a home, they wonder how much they’re actually going to have to spend. As a buyer, don’t assume you’ll be able to purchase for substantially less than the list price. Offering lower than asking price is a reasonable strategy if the house is overpriced compared with other similar homes in the area, or if it’s a buyer’s market with lots of available inventory. Trying to get a deal when you’re in the midst of a busy seller’s market however, might not be the best tactic. If the seller is being well represented by their agent, their list price won’t be far off of what they actually expect to sell for…they want to take advantage of the market as much as you do and they won’t accomplish that if their property is over-priced. Trust your realtor’s assessment of the property’s value and be prepared to make your first offer a strong one.
Not being prepared for a bidding war
If there is ever a time when a bidding war could be on the horizon, it’s during a seller’s market. No buyer wants to be in a competing offer situation for fear of being forced into going over budget, but there’s an easy fix for this. Just set your search criteria below your maximum budget. This automatically leaves room in case you have to negotiate the purchase/sale price more than initially expected and still ensures you’re protected from committing to a price that you can’t really afford.
Not learning from your mistakes
There’s no shame in learning that your offer has been declined or that you were beaten by a competing offer. It is easy, though, to get discouraged if you’re losing out repeatedly. Learn from your last transaction so you can move in to your dream home. You may have to let a few slip through your fingers before finding one that sticks. Just make sure that when you do find the next “right one”, you’re prepared to address it efficiently and effectively so that you’re giving yourself the best opportunity to be that home’s next proud owner.