When it comes to competitive markets, these are mistakes buyers should avoid and beware of when submitting offers. To many times I have seen a buyer make one of these mistakes and miss out on their land or home purchase. It is important to be aware of these to not trip yourself during the buying process.
“Dragging your feet”, being undecided on whether you want to purchase a property or home could lead to you paying more money in the end. The old adage goes, if you like it then someone else likes it. You ended up in a bidding war and now are forced to pay more because you waited to get your documents inline or make a decision. Buyers need to have their pre-approval letters, bank documents, or supporting funds documents ready from day one. Having these documents gives the buyer strength in the negotiating process because they are not contingent on being approved for financing. Sellers are more willing to accept an offer that has the approval in place vs one that may be slightly higher but still has not yet been approved to purchase.
Making a max offer based on pre-approval
When you are home shopping or even looking for some recreational land, beware of this pitfall. If you qualify for a certain amount (say $100,000), you find a home that is listed around $110,000, and you offer a bid of $100,000. The seller may accept your offer but you have left yourself no wiggle room if they choose to counter. Without covering the additional costs yourself you will likely miss out on this home or property.
Having a general pre-approval letter is best as this does not show your hand to what you can afford, only that you are able to be approved for purchasing that real estate. Coming to the table with an approval letter stating you are pre-approved for the exact amount of your offer could make a listing agent and the seller uncertain about your ability to close the transaction.
Everyone wants a deal. Not all real estate is over priced. Make sure that your buyers agent is educating you on current market trends and values. Making a low ball offer could insult the seller and make them not want to work with you right out of the gate. Submitting a low offer is not bad as long as it is in the general area of the current market conditions. Use the data your agent provides you to justify your offer. Low ball offers more times than not backfire, as sellers will generally reject the offer outright or even counter at a higher than asking price just to show what they think of your offer.
Waiving inspection periods
This can be very dangerous for a buyer. If you choose to waive your home inspection or property inspection period be very careful. Those inspection periods are there to protect you the buyer from any undisclosed information that would be found during an inspection. Until your inspection period is complete you should never waive your right to these. Waiving your inspection periods could also cost you your earnest money deposit if you choose to back out of the deal.
Not presenting yourself as a strong buyer
In today’s market buyers need to be prepared for competing offers. Your agent and you need to present yourself as a strong and reliable buyer. The sellers agent is helping them make the decision on which party they think would be the easiest to work with and which is most likely to close. Avoid being nit picky, be confident in your offer, and don’t fret over items that can be changed such as paint color.
The best approach to take is listen to your agent. They have access to all of the data. Use that data to make your decision in the negotiating process and don’t wait to make your offer or you could miss out on your dream home or property.