Mistakes Buyers Should Avoid When Making Offers

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.

Delaying

“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.

Lowball offers

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.

Important Sacrifices Not to Make When Hiring a REALTOR

3 Very Important Things People Sacrifice When Hiring a REALTOR Out of Duty to a Friend or Family Member

We receive requests from out-of-state buyers constantly who want to view property or homes in the Upper Peninsula. Buyers reach out because they may be feeling pressure from a family member or friend to use a specific agent in their area as a referring agent. They may have a friend or family member who is a REALTOR® that have said they would find an agent for them in the area they are looking. The buyers generally have no idea of who they are being referred to.

What is that agent really doing? The friend/family member (who was a REALTOR®) is looking for a local agent that is willing to pay a referral fee for sending them the buyer. Most referral fees tend to be on average 25% in the real estate market. The percentage is taken off of the buyers side of the commission in this example. Buyers tend to believe they are being referred to an gent that is personally known by the family member or friend. In all reality, they agent they are being referred by is just trying to make some extra money and didn’t know the agents here. This means that the buyer is being treated as a financial item, not a person trying to purchase their next dream home or recreational property.

This is a pretty common scenario. Many REALTORS® are trained to be ruthless in an effort to be part of any real estate transaction that involves someone they know. REALTORS® are encouraged to constantly be part of the conversation within their “internal circle”. If you are in that circle, you may be constantly bombarded with pitch lines and other marketing ploys so that you are mentioning those agents to anyone you know.

Now, I am not saying this is a bad thing if the REALTOR® you know is truly a professional and always looks out for their clients. But don’t assume that a REALTOR® is good just because they are great at networking. What makes a great REALTOR® is someone who will look out for their clients best interest regardless of what the commission is or who their friends are.

The competency of your agent has a huge impact your real estate transaction. Buyers nowadays feel like they know everything their is to know about real estate with all the information available online. The reality is that a real estate transaction is not always a one size fits all deal. Choosing the right REALTOR® can make all the difference in your transaction.

Some buyers, and even sellers, think that an agent is only there to open the doors for you to view homes on the market, write a contract, and collect a check at closing. If this is how you were serviced than you were poorly served by your agent. An agent should constantly be involved throughout the process, providing you with education, knowledge, and guidance.

The reality is that a real estate transaction is not always a one size fits all deal. Choosing the right REALTOR® can make all the difference in your transaction. Here are 3 things buyers can sacrifice when feeling obligated to a friend or family member:


Security of Personal Information

 

 

 

It is crucial that you feel that your information will be kept secure and protected throughout your transaction. Working with an agent who is a close friend or family member, or close with those individuals, can be very awkward if you have details of your transaction you did not want out get released. Having an independent 3rd party separate from your personal life is a good way to eliminate that problem.

Your agent may be very talkative and this could lead to them inadvertently letting out details that would hurt you in a negotiation process. Professional REALTORS® know that personal information about their clients should never be exchanged to anyone without their clients written consent. Some agents feel they can speak on your behalf or even make decisions for you because they know you so well by being related or friends of a relative. This is a terrible mistake, but it happens all too often. Before hiring a REALTOR® who has been referred to you, make sure that they have a are professional and can assure you that they are not “loose lip talkers”.


Avoiding The Hard Truths

 

 

 

If your agent ensures that you fully understand a situation, you are much more likely to get the results that you are looking for. Being properly informed is a major advantage when buying or selling a home. When you are working with an agent who is referred, there is a good probability that they make not be as experienced as one of the top local agents. They may not be as willing to be upfront and honest with you, as they may be concerned with offending you. Having an agent who is straightforward and tells you what needs to be told is vital to manage expectations.

There are a great deal of details and information to cover in a real estate transaction. Unfortunately, choosing an agent who is not able to communicate all of these details fully, may leave you confused and unsure about certain critical items. Being uncertain on any part of your deal can cause additional undue stress and potentially cause your deal to fall apart. Before you hire an agent that has been refereed to you, make contact with them. Make sure they communicate in a way that makes you feel comfortable about the working relationship you are getting into. Ensure they provide factual information and not just their opinions. Remember, a home purchase is probably the largest transaction you will have in your lifetime. Ensuring that your agent represents you in the way you want is important to avoiding a lifelong mistake.


Navigating Legal Minefields

 

 

 

When working with an agent who has been referred to you, ensure that they understand the common legal issues that can affect a real estate transaction. If your agent is related to you, you may need to disclose that with the other party, based on your State’s regulations. Some states require this disclosure because it has such a strong influence on a Realtors decision making process.

Find out if your agent has been or is involved in any lawsuits pertaining to there practice. Agents are not attorneys. Many times REALTORS® are asked legal questions that they should not be answering. When working with someone associated with your friends or family, they can be tempted to advise you out of personal opinion.

When legal issues become part of the real estate transaction a good real estate agent knows how to navigate these obstacles and provide you with the guidance and direction you need. The information an agent provides needs to remain objective and without personal opinion. Your REALTOR® should always recommend that you hire an attorney if you feel the need to. This should never discouraged. They should be more of an “advisory” role, rather than a salesperson or someone helping you shop for a home or property. A good real estate agent should follow your lead on every decision and keep you properly informed throughout the process.


Final Thoughts

It is unwise to plays roulette and go with first REALTOR® that is referred to you. Most importantly, determine what the motivation of the person referring the agent to you is. Find out if they have used that agent previously and had success with them. If they do not know that agent personally or are only referring them because of a referral fee, you may need to find another agent. Conduct your own due diligence and be cautious before partnering up with an agent.

Use the internet to your advantage and research any agent you find online. If they have no reviews and no web presence, ask them point blank why that is. If you feel that the agents answers are vague or misleading, use common sense to determine if you should find another realtor. REALTORS® have much more leverage over your success than you may realize. Don’t hire an agent who is questionable. There are plenty of great, hardworking, honest REALTORS® in your area. Find an agent who is highly reputable and offers you the best service that you can find. You will be extremely glad that you did!