Here’s what we’re seeing at 4 Buyers Real Estate.
- Our clients continue to buy properties, even against competition that is willing to waive their rights to a home inspection or a mortgage contingency. (That contingency allows buyers to get their deposits back if their mortgage is delayed or denied. Our buyers retain that right.)
- Three buyers procured properties for significantly under asking price. (A total of $65,000).
- One buyer made an offer $50,000 under asking price, knowing that the property was overpriced. They didn’t get it. That property is still on the market, two months later.
- Two-thirds of our clients bought properties that were new to the market and had more than one other buyer interested. In those bidding wars, our buyers have always had a home inspection and mortgage contingency (unless they could afford to buy the house for cash).
Things we do to help buyers succeed:
- Provide a market study of each house before preparing an offer negotiation strategy. That way, the buyers know what a fair market value is. Being informed helps them decide on an offer that is economically responsible.
- Prepare a professional-looking offer presentation. We get feedback from seller’s agents that the presentation makes a difference when their on two similar offers. Sellers always want to know the price first, then when it will close and other terms. However, they consider whether they can anticipate anything going wrong, too. Our presentations answer that with a resounding “no,” and it helps our clients. Our clients’ offer stands out, because we show our buyers as the most ready and organized.
- Advice during the home inspection. We prepare buyers for their inspections, and pre-schedule so that we can finish inspection soon after the offer is accepted. When a house has a problem that will be too costly or too open ended, we are there to advise them about whether to continue with the purchase. Buyers need to have the latitude not to buy a property with serious problems. By getting the inspection quickly, we satisfy the seller’s need to know, as soon as possible, that the transaction will continue or not.
We also help our buyers understand the tricky tactics that some listing agents use.
How do listing agents use pricing to drive prices up?
- Underpricing: If a property is worth, let’s say $650,000, listing agents may price it at $599,000. Listing agents are obligated to get the highest price (and best terms) for their client, the seller. They will not tell the people making offers that most of the offers are under $650,000. Then they get 11 offers. They are hoping that scares some buyer into saying, “I’ll pay more to get this, 11 other people want it; I have to bid really high.” Then, that buyer pays $680,000 for it.
- Overpricing: Especially in the spring market, when demand is high, we see properties come on the market priced much higher than they are worth. Buyers who like a particular house, a lot, may think that they have to pay that much for it. Some will. Buyers who don’t know the market value of housing because they are working alone, depending on Zillow, or are new to the market may pay a significant amount over what a property is worth by purchasing an overpriced property for asking price. Paying asking price is not necessarily paying a fair price! They think they are getting a bargain, because so many properties sell for over asking price. They may even offer above asking price, because they have gotten used to under-pricing. Early this spring, we have saw properties overpriced by over $100,000. Some have gone under agreement, but some are still on the market.
Resisting pressure to give away rights:
Some listing agents advise their sellers to seek offers where the buyers are waiving their rights to inspection and mortgage contingency. Our clients sometimes lose out on properties where another buyer waives those rights. We are sticking to our opinion that it is foolish to buy a 100-year-old house without a professional inspection. Also, what does it say about the house, if the seller doesn’t want it inspected?
Although our clients almost always get the mortgages that they apply for, 5 percent of the purchase price is at risk if the mortgage is delayed or falls through. That is way too much money to risk, in our opinion. Mortgage delays do happen, especially during the busy spring market, when appraisers are heavily booked. That’s why we help clients insist on a mortgage contingency.
It’s still a pretty tough market for buyers. The prices are high and will go up some this spring. We won’t know how much the prices have risen until everything closes, and we can look back at it. In the mean time, let’s get you the best deal you can get.