Mistakes homebuyers make as seller’s market looms
June 14, 2012, 7:09 a.m. CDT
McClatchy/Tribune - MCT Information Services
FORT LAUDERDALE, Fla. — Homebuyers have had the advantage for six years, especially in hard-hit real estate markets. But now sellers are enjoying a resurgence.
Some buyers don’t realize or can’t accept that the market has changed, real estate agents and analysts say.
“People come in, and they think the market is 2008 or 2009, when sellers were desperate,” said Jennifer Sommers, an agent with Nestler Poletto Sotheby’s International Realty in Boca Raton, Fla. “They’re not desperate. Not at all.”
As a result, some buyers aren’t getting the homes they want. Here are common errors that agents and experts say buyers are making:
STICKING WITH LOWBALL OFFERS: Ridiculously low offers were the norm during the housing bust, but buyers can’t get away with them anymore, agents say.
Stephanie Chen is closing next month on her Weston, Fla., home after previously rejecting an offer for $400,000 less than her $1.1 million asking price.
“The mistake some buyers make is going so low it’s not even reasonable,” said Chen, 32. “We just walked away from the table.”
Buyers and sellers have different definitions of a lowball offer, said Randy Bianchi, co-owner of Paradise Properties of Florida in West Palm Beach, Fla. Sellers think they’ve been lowballed on offers less than 90 percent of their asking prices, while some buyers say bids of 80 percent to 85 percent of the list price are reasonable, Bianchi said.
Jackie Smith, an agent in Florida’s Broward and Palm Beach counties, said a client recently went against her advice and offered $55,000 less than the $194,000 asking price on a two-bedroom waterfront condominium. The bid was rejected.
“Right off the bat, buyers say, ‘I want a steal,’ and I tell them they have to wipe that word out of their vocabulary,” Smith said.
TAKING TOO LONG TO “SLEEP ON IT”: Agents who tell buyers not to dilly-dally often are accused of being self-serving. But with so few houses available for sale, agents say buyers don’t understand how the market has changed.
According to the National Association of Realtors, the number of homes listed for sale has fallen by more than one-third since the peak in July 2007.
Inventories will swell as more bank-owned homes hit the market in the months ahead, experts say. For now, though, new listings are coveted by house hunters frustrated by the lack of choices.
Not all homes sell quickly because some sellers are asking for higher than market value. But properties priced appropriately in desirable neighborhoods tend to go under contract within days or weeks — or sometimes hours.
A home in Jupiter, Fla., that was listed at 7:30 a.m. had eight requests for showings by 10:30 and a contract by noon, agent Susan Bennett said.
Her client, Eric Wagnon, missed out on that property but found a three-bedroom home nearby. Not wanting to be outbid, he offered the full asking price: $330,000.
“For the right home that’s priced right, you don’t want to mess around or you’ll end up without the house you want,” said Wagnon, 42, a television producer.
LITTERING THE CONTRACT WITH CONTINGENCIES: The standard real estate contract includes stipulations, such as the buyer qualifying for a mortgage.
But some buyers also insist on unnecessarily long inspection periods — 30 days instead of 10, for instance. Or they want the sale to be contingent on a family member touring the property.
“That’s ridiculous,” said Mike Pappas, president of the Keyes Co. “You have to have a clean contract.”
FAILING TO MAKE A PERSONAL IMPRESSION ON THE SELLER: With some homes getting two or more bids, it’s not enough to offer a competitive price. Owners will look at other factors to decide which offer to take.
“It’s not just about the money,” said Jim Heidisch, a broker in Pompano Beach, Fla.
For example, a seller looking at two $600,000 offers on a Parkland Isles, Fla., home took the one in which the buyer agreed to pay cash and allowed the seller to take the washer and dryer, said Michael Citron, the listing agent.
Take the time to meet the seller’s agent. Strike up a conversation. Ultimately, it’s the seller’s call on which offer to select, but the listing agent will have input, and it doesn’t hurt if the agent likes the potential buyer.
Also, consider submitting a personal letter with the contract, describing features you like about the home and why buying it is important to you.
“It warms the seller up,” Citron said. “It shows you’re not just a number.”
WAITING TO GET PREAPPROVED FOR A MORTGAGE BEFORE STARTING THE SEARCH: During the boom years, buyers didn’t worry about arranging their financing up front because mortgages were easy to get. Not so anymore.
Getting preapproved for a loan can take two weeks or longer because banks have tightened underwriting standards in the wake of the housing bust, mortgage brokers say.
A head start is now essential in South Florida, where cash buyers represent roughly half the market. Some sellers even require buyers to be preapproved before making an offer, Bennett said.
A preapproved buyer has submitted pay stubs, bank statements and other paperwork and received a commitment for a specific mortgage amount from a lender.
“Buyers can really jeopardize their transactions if they don’t do the work up front,” Bianchi said.
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