If you talk with anyone who has been trying to buy a home you will hear stories saying it’s almost impossible. It is hard, but most buyers are making the process much harder on themselves by taking an approach that has very little chance to succeed.
I only take on a very small number of buyer clients, but I talk with dozens of buyers ever weekend at our open houses. Between talking with all those buyers and seeing the offers we receive on our listings here are some of the big mistakes that will prevent you from ever buying a home in the Austin area. I feel bad for those buyers and so I thought I would talk about a few things I see buyers doing and explain why they are causing you not to be able to buy a home.
Focus On The Small Things
It’s amazing how many buyers call me and ask “How old is the water heater?” before they have ever seen the home. As if that should be in the top 100 reasons why you should buy a particular home. Many of the things unsuccessful buyers focus on are things that can be changed with, in this case, one phone call to a plumber.
It’s a lot easier to find a new water heater than buy a home that meets your needs. Replacing a water heater might cost you $1,300 but in our appreciating market waiting another 3 months before a similar home with a new water heater is available might cost you $20,000.
Even larger items that need to be replaced such as a roof or AC may be insignificant over the long run if a home has a floor plan that fits the way you live in a neighborhood you love.
Along the same lines of focusing on the small things is waiting for the perfect house. Nobody gets 100% of what they want, including me. Buyers who held off from waiting for the perfect house last year cost themselves $100,000 or more. In addition, when there is a home that is close to perfect, everyone will want that home making it almost impossible to buy.
Have 2 Real Estate Agents
So many buyers in our area are focused on getting a rebate from their agent that they don’t want to commit to working with one experienced agent. They’d rather pay $80,000 too much for a house as long as they get a $5,000 rebate from their agent.
What these buyers don’t understand is by not committing to working with one professional agent they are putting themselves at a disadvantage in several ways.
I was talking with a couple at an open house a couple weeks ago. They were interested in buying the house but they didn’t know how to make an offer. When I asked if they were working with an agent they said they had 2 they were working with but they didn’t want to commit to working with either one.
This fear of commitment hurts those buyers because neither of those 2 agents are going to spend any time with them to explain how to make an offer. Even worse, because they know you aren’t committed to them you will get bad advice because each of those agents will be trying to get you under contract on any house even if you are paying way too much for the home or even if there is something wrong with the house.
In addition, because so many homes are being sold “off market” where you won’t see those listings on the internet you are missing out on good portion of the homes you could buy. Our company doesn’t recommend our sellers sell off market, but because I am well known in the area other agents tell me about their off-market listings. To be upfront with you, when I know about off-market listings or really good deals I don’t bring those deals to buyers who aren’t committed to working with our company. If you are working with 2 agents you won’t know about those off-market listings.
Focus On Your Letter Not The Contract Terms
Would you believe over half the offers we receive have zero chance of being accepted simply because the way the offer is written. It seems like buyers spend so much time focusing on how to write a letter to the seller they forget it’s my job to keep emotion out of the transaction and keep the sellers focused on the terms of the offer.
Over my career I’ve presented over 1,000 offers to sellers. At this point I know what gets them excited and what turns them off. Every week I notice what other agents are including in offers. We take notes of these offer terms so when we are working with a buyer, we can provide you with the latest market intelligence about what it’s going to take to get your offer accepted when there are multiple offers. Let’s compare that to the average agent who only sells 2-3 homes per year. How could that agent possibly give you the best advice about what offer terms will give you the best chance of getting your offer accepted?
When we take on a buyer client the first thing I do is review what I call our Buyer Power Checklist. This is where I go through the standard offer paperwork and explain what each section means and talk about what other buyers are doing to get their offer accepted. This way you as the buyer can decide in advance what you are willing to do. For example, are you willing to do a short inspection period, offer a large amount of earnest money or waive your appraisal contingency? The real estate market moves too fast to be trying to make these decisions on a Sunday night. In my experience buyers who spend the time to think about their offer in advance make stronger offers within your comfort level.
What all this means is if you want the best chance of making a strong offer you should focus on the offer and not your letter to the sellers. You should be working with an agent in an office that lists homes and can give you up to the minute advice about what’s going on in the real estate market.
The real estate market is moving so fast you don’t have much time to make decisions. I see many buyers acting indecisive. They haven’t carefully thought about what they want, what they are willing to pay and are so worried about the opinions of their friends, family and co-workers think they become paralyzed. Buyers make decisions slowly and when they finally make a decision, they are quick to change their mind. Some of the most unfortunate interactions I’ve had over the years are with buyers who were talked out of buying a home 5 years ago by friends and family only to never buy a home at all. Being indecisive has been a financial disaster for them.
We recently bought a home for our family. There was really only 1 floor plan in the area that fit our needs both for our family and our business. I had already decided what I was willing to do and what I wouldn’t do to buy a home with this floor plan. That included deciding a low and high end price I was willing to pay. My wife found out a home with our desired floor plan was coming on the market. She arranged to see the home and we wanted to make an offer. Because I had thought about this in advance it allowed me to be decisive and get the home under contract quickly before it ever hit the open market. I would up paying more than I would have wanted to pay but considerably less than the high end amount I would have been willing to pay.
As it turns out being decisive paid off because in only a couple months, we are already seeing homes that I would never consider buying sell for a higher price than we paid for our new home.
Letting Your Ego Get In The Way
The real estate market does not have a memory. Besides having a larger house shopping budget one advantage relocation buyers have over in-area buyers is they don’t remember what prices were a year ago. It’s wishful thinking to wait for prices to go back to 2020 levels. Often in-area buyers can’t get past what could have been and how much less they could have paid last year. Meanwhile relocation buyers are comparing prices to what they could get in the Bay Area or Seattle and our prices seem like a steal.
Many buyers who are moving up or downsizing have unrealistic expectations. They are excited to sell at incredible prices but only if they can get “a deal” on the next home they are buying. This is all ego and a great way to make sure your family stays where you are.
In my own situation I had to pay much more for our current home than I could have bought it for last year. I could have puffed up my chest and either refused to buy the house or put in a low offer with no chance of being accepted only to see another family buy the house. I did not want that to happen. Because I know it’s human nature to let ego get in our way I anticipated that. When I started to doubt buying the home, I recognized it was just my ego which helped me make a great decision for our family.
As a consumer it’s always important to recognize your own bias. Once you do that you can adjust your decision making process to get around your bias and make better decisions for yourself. In this case, hopefully be able to buy a house. If we can help you contact us at 512-791-7473.