I'm primarily a listing agent so I'm seeing buyers every weekend at our open houses. I'm also talking to agents and I'm seeing the offers that they put in every day. These are the four mistakes that I'm seeing buyers make in March of 2023.
Making Bad Offers
The first mistake I'm seeing is putting in “bad offers”. What I mean by that is a lot of buyers are out there and they're thinking they're going to make low offers. And you know what? A lot of sellers are actually negotiable right now.
Sellers are willing to come down on their price if they see that it's a good deal and you're a solid buyer. However, I've noticed that many buyers are submitting offers at a low price with unfavorable terms that are unrealistic to both myself as a listing agent and the seller. These red flags are just signaling to me as a listing agent and to the seller that you're going to be flaky.
So what happens at that point is that the sellers don't want to be jacked around. And let's face it, no seller wants to waste their time dealing with a flaky buyer. While a lower price may be negotiable, the rest of the terms must be reasonable and mutually beneficial. Otherwise, the seller may feel like they're being taken advantage of, and the deal won't move forward. Recently, I went through a similar situation, but thankfully, the deal closed successfully.
I had somebody make an offer on a house and the price was a little bit low. But really what happened is the terms were just terrible and nobody in their right mind would sign a contract like that. The seller wasn't even willing to make a counteroffer. And from my standpoint, normally if I get an offer and I feel like the buyer and the agent are going to be solid and it's going to be a good transaction, I generally encourage the seller to make some kind of counteroffer, even if it's only a dollar.
However, in this case, the terms of the offer were simply too bad to consider. They said, “I'm not even going to make a counteroffer”. Then a couple of days later, that same buyer came back with a full-price offer and closed at that price! They could have negotiated down on the sales price if they had made other terms in the contract better and made themselves look more solid.
You really need to talk with your agent, and more importantly, your agent needs to have some experience. One of the advantages of working with myself or a team that actually has experience is that I've presented over a thousand offers to sellers, and as a result I have a pretty good idea of how they're going to react to some of these items.
If you want to negotiate down lower on the price, you probably need to make better terms for the rest of the contract. Now, at the same time, the other mistake I'm seeing along the same lines is buyers refusing to make an offer at all or just not wanting to make an offer because they're so worried they are going to offend somebody if they make an offer.
In my experience, maybe I'm wrong, but I don't think a single buyer has ever been killed by making an offer. The worst thing that happens is you get your offer rejected. It takes 5 minutes to write up an offer. All the contracts are just standard paperwork and just fill in the blank. I see buyers and I see agents and they're going around in circles spending so much energy saying “We might make an offer, would they consider this type of an offer?”
The sellers aren't going to negotiate without knowing all of the terms. So when you or your agent calls me and says, “Hey, we want to make an offer for X dollars”, nobody takes that seriously because this is just negotiating 101. Before you negotiate, you want to know all of the moving pieces in that offer, not just the sales price.
Focusing On The Wrong Thing
The second mistake that I'm seeing home buyers in the make is that they're just focusing on the wrong things. This could be partly location, this could be partly things about the house. I saw a realtor post a message the other day about the buyer that she was representing. She was looking for a particular property and the buyer was willing to do just about anything, go anywhere except for one thing.
The one deal breaker was the house needed to have a window in the laundry room… and this just doesn't make any sense! You really should be focusing on things like the location and the neighborhood and some of the other features of the house and not some of these things that really, in the grand scheme of things are not important at all.
Not Willing To Do Minor Updating
A lot of other buyers I'm seeing are so terrified about doing minor updating. And again, the adage in real estate is the three most important things are “location, location, location” and it's true – but some people are getting it all wrong. What’s happening is I'm seeing people who would shell out top dollar for a house in a tier-three or tier-four neighborhood because maybe it's newer or maybe it already has some updating. Meanwhile, they’re passing up a home at the same price in a perfect location but the home needs a little work done.
Buyers are passing on superior neighborhoods where you can walk to the elementary school or it has better amenities, but perhaps you need to spend $4,000 on replacing countertops. And it's so easy to do that. This is one of those things that I know it catches the eye that to buy something that's newer now because it has that bling to it. It's really a mistake over the long run.
Working With A Part Time Agent
The third mistake that I'm seeing home buyers make in the is working with a part-time real estate agent or maybe a discount real estate agent and focusing on getting some kind of rebate back from that agent.
I know you're going to argue with me. You're going to say it doesn't matter. But again, I'm the listing agent usually in these deals, so I'm often the only person that really understands all of the dynamics of this going on within offers and closing on a sale.
There are a couple of things that happen when you're working with an agent like this. First off, there are still many home sales occurring off-market. This can be the case when you're working with an agent that is part-time, like for example, your cousin from Houston, or an agent that is more of a rebate broker. These agents may lack the necessary connections or may not actively search for off-market properties, thus making it difficult for them to secure such deals.
So all you have access to is the homes that are listed in MLS. And the second thing is that you have to be really careful with a lot of these agents. Are they really looking out after you? Sometimes there might not be any malice there. That could just mean that they don't have the experience.
They may not really be out in the market and have the number of home sales an experienced agent has done, so they can't tell you which homes or maybe a floor plan or maybe a neighborhood you might want to stay away from.
Particularly with the way the market is right now, you might be a little bit anxious, you might be a little bit nervous. But there are things that you can do as a home buyer defensively to minimize any downside risk in the market. And often what I'm seeing is agents that don't have a lot of experience they're not going to be able to shepherd you and guide you through that. And you really do want somebody who's going to give you some advice and tell you maybe you don't want to buy that house.
In addition, what I’m seeing in the market and with some of these agents, including some of the agents that work at publicly traded companies, is they're being graded on the number of homes that they show buyers before those buyers go under contract on a house. They have pressure to get you to buy a house quickly. How does that work to your advantage as a buyer?
You want to be able to buy when you find that perfect house and not feel rushed into it. Again, I can tell you as a listing agent, there are agents that are representing buyers that we love, that we roll out the red carpet for because we know they're not really going to be representing the buyer. Then it's going to be a super easy transaction for us and for the sellers of the home.
In the end, you pay way too much for the house. That's just some advice again from a listing agent about making sure you're working with a professional agent.
There really are three choices you have, as I see it. You can be out on your own just visiting open houses and doing everything yourself. The second is working with somebody that's part-time or maybe one of the rebate brokers. And the third is working with a professional agent like our company that can really give you advice about the market, particularly if you're relocating here or you've never bought a house before.
Focusing On Doom and Gloom
The fourth mistake that I've seen home buyers area make is that they're focusing too much on the doom and gloom of what's going on out there.
Many people are feeling worried and uncertain about the state of the economy, which is causing a lot of anxiety and nervousness. And I'm the first to tell you if your job is shaky or you think you're going to have to move and sell your house in two years, you probably should hold off on buying a house.
But for the people that buying a home does make sense and it does solve your problem you should buy the house. The biggest difference that I'm seeing is there's a difference between real estate and the stock market. And what is that? The difference is that you have to live somewhere. Particularly I'm talking about the house that you're going to live in, that your family's going to live in and your kids are going to grow up in, that's different than buying an investment property.
You have to look at that and have some perspective. Have a five-year perspective or a ten-year perspective. And look at the number of people that are moving to the area. There are a lot of people out there trying to capitalize on that doom and gloom. I don't think that's all that great for you because this is a great place to live and it's going to be a great place to live over the next ten years.
If you find that perfect house that you want to buy, I'm not saying that there's no chance of it dropping in value in the short run and who knows exactly what's going to happen. I can't tell you. But what I can tell you is that I bought a house for my family about a year and a half ago and I love it. Every day I'm just so grateful that we get to live in this house that I love. And I feel lucky that we didn't pass on it. One of the mistakes is that those great homes don't come on the market all the time. If you have an opportunity to buy it, if it's a perfect fit for you, you might consider that you should buy and not listen to some of that doom and gloom that's out there, because my guess is in a couple of years especially, you're probably going to regret not buying that house.
I hope this information was helpful for you. If you are out in the market for buying a home and you want to be working with somebody that has the experience of working with sellers and also buying homes for myself and working with so many clients call or text me directly at KopaSeller.com or if it's more convenient for you, schedule time on my calendar at KopaConsultation.com.
If you're planning to sell in 2023, now is the best time to attend our Free Home Selling Workshops. If you want to attend a workshop, get in touch with us and we will notify you when they are scheduled. As always you can check KopaWorkshop.com to see dates and times of our in-person and online Free Home Selling Workshops. For years home sellers have told me they benefited from attending our events. Sign up at KopaSeminar.com.
The information on this page may have changed since we first published it. We give great real estate advice, but this page (and the rest of our site) is for informational use only and is no substitute for actual real estate, legal and financial advice. If you’d like to establish a Broker-client relationship, reach out to us and we’ll tell you how we can make it official. Sending us an email or reading this page alone doesn’t mean we represent you.
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