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The one thing that most home buyers understand is that the real estate markets and climates fluctuate and can do so rather often. And while they may have the upper hand sometimes if a market is slow, when it heats up and things begin to favour sellers, they do have to change their ‘tactics’ in order to get what they want.
Here are five all too common mistakes many buyers make — mistakes that you can learn to avoid — when shopping in a seller’s market.
Not Offering Your Best
Your best money offer that is. Bargain shopping, for many of us, is almost in our DNA and so, for some, is bargaining on price. And their are sometimes some very legitimate reasons for making an initial offer that is less than the asking price.
For example, if the comps have been run and the home is overpriced for the area, or if there is plenty of similar housing stock available.
In a seller’s market however it’s a dangerous game. The vast majority of home sellers do as much homework on pricing and market conditions as buyers do, so they know what their home is worth and what’s out there in terms of competition.
If they are selling in a ‘hot’ market then in reality a low ball offer may not be one they even consider for more than a few minutes before passing.
Playing a Long Waiting Game
No, a home should never be an impulse buy. On the other hand though dragging your feet in a seller’s market is far from a good idea.
You see while you are still deliberating and calling your Realtor to arrange a third viewing because you are still wavering a little the chances are good that a more decisive buyer will come into the picture and you’ll lose your shot at the home altogether.
Not Being Financially Prepared
Getting yourself pre-qualified for a mortgage is a sensible move in general, but in an active real estate market it is a must.
Maybe you are 99% sure that you’ll get the financing you want when you find the right place so you plan to only mortgage shop once you do. However, if you make an offer most sellers want to close the deal ASAP, and if you still have to get financing in place they may very well opt for a different offer from someone who does, sometimes even if it’s a little lower.
Not Being Prepared for a Bidding War
Have you ever shopped on an auction site – eBay springs immediately to mind of course – and found yourself overbidding on an item in the heat of those last few minutes, just because your adrenaline is pumping and you really want the item? Bidding wars happen in real estate too, especially in a market that is currently favoring sellers.
While it’s not an ideal situation by any means, in a hot market you may have to fight for the home you want. But you have to go into the fight with a clear line drawn in the sand as to when you will have to admit defeat.
Determine, rationally and reasonably, what you REALLY can afford to pay and then do not go over that, however much it will hurt to walk away and begin your search again. Getting your dream home is great, but losing it because you got in over your head is not, so common sense has to prevail.
Not Learning From Your Mistakes
In a seller’s market it’s not unusual for a buyer’s offer to be turned down and there’s no shame in it either. You just pick yourself up and regroup. But what is several offers have been turned down? Then something is likely wrong.
In this case huddle with your Realtor to determine what this might be. Maybe you are just shopping a little out of your real price range. Maybe the area you’ve been bidding in is just TOO hot right now. Figure out how to craft a better offer and the next time the chances of it being accepted will be so much higher!