Today, homebuyers are more educated and savvy than ever. It’s not surprising when a buyer asks for a list of recently sold comparable sales in the neighborhood, days on the market (DOM) a property has been listed or price reductions and other details found in a properties “listing history.”
Even with the best tools in hand, intelligent buyers can make big mistakes that have detrimental effects during negotiations or after the sale. Review these common mistakes others have made and avoid them entirely the next time you buy a home.
Mistake #1 – Making a low-ball offer just to see how low a seller will go.
This hardly ever works. For my customers (you know who you are) who are “unapologetic bottom fishers,” don’t worry. I will continue to put in any offer you’d like no matter how often I get hung up on or screamed at. I will stick with you till the cows come home and we find you that perfect home in a haystack!
For the rest of you, going around town making low-ball offers only upsets sellers and eventually you become known as, “that guy who makes low-ball offers on everything in town.” Don’t get me wrong, everyone including me loves a great deal.
In order to avoid insulting the seller and getting nowhere in negotiations, study the recent comparable sales in the last 3 to 6 months along with the average percentage below asking price that most homes are selling for in that neighborhood. This percentage is available to your Realtor. Most sales in our area are within 8% or less of the listing price. Remember, unreasonable low-ball offers tend to turn sellers off and you may not even get an answer or counteroffer in return.
Mistake #2 – Thinking foreclosures or short sales are always better deals.
Standard real estate sales, properties that are not distressed sales, can often be the best deals in a town. The short sale you may think is so great may not look so great after six months of waiting for an answer. Then after all that wasted time, the bank could come back with a higher price. Also, a foreclosure being sold “as-is” may have significant repairs to get it up to “livable condition.” These costs could bring your great foreclosure deal to a higher overall price than the straight-forward home for sale across the street.
Weigh all your options, including regular home listings before focusing your sights exclusively on distressed property.
Mistake #3 – Meeting the seller.
Meeting the seller before or during negotiations is hardly ever a good idea. Unless you are dealing with a FSBO (For Sale By Owner), there is really no reason to meet with the homeowner in person.
For example, say you make a comment about how perfect the home is for you or that you’ve always wanted a pool with a waterfall. Those benign comments could tell a savvy seller that you will pay more than your initial offer because you, “love their home so much.” Comments you thought were just being “nice” could cost you thousands during negotiations on price.
On the other hand, say you think you are being smart by telling the seller how many things need to be fixed or brought up to your standards. This may seem like a way to get a lower price on the property, but it could backfire with dire consequences. Negative comments about the homeowners property may be taken to heart by a seller who has lived in the home for many years. They may have even raised their children there. Cutting down a home can be offensive to many sellers. When they see your offer they may remember some of those negative remarks and decide your offer is unworthy of even responding to.
The safest tactic is to keep your thoughts and opinions to yourself and let your Realtor do all the talking. Any issues with the home will come up in the inspection. Since inspections come from a third party, it lessens the blow and takes the focus of you.
Mistake #4 – Missing hidden defects before closing.
This is one of the most expensive mistakes any homebuyers can make. Every home should be professionally inspected regardless of whether it’s sold as-is or it’s brand new. We recommend our home buyers always have a home inspection completed by a professional home inspection company.
Besides the standard home inspection, you should consider additional inspections for mold, radon, pool equipment and termites. All home inspections should be completed by an expert in that field. Spending $450 to $900 in inspection costs is nothing compared to money you can save in future repairs and headaches. Home inspections are not something any homebuyer should skimp on.
Mistake #5 – Wanting a “great deal” but falling in love with one home.
Every buyer today wants the deal-of-a-lifetime. There is nothing wrong with that thinking. The mistake made is not wanting a great deal, it’s choosing just one home to make that deal a reality.
Falling in love emotionally with a single home makes you depressed and leaves you with nothing when you don’t get the deal you wanted or buyer’s remorse for paying more than you planned on if you do get the home.
Instead, we recommend narrowing your search to 3 properties that you can live with if you get that great deal on any of them. If plan “A” doesn’t work out, then you have plan “B” and “C” to fall back on. This prevents budget busting and takes some of the emotion out of the purchase.
Avoid the pitfalls above and you’ll be on your way to finding the home of your dreams in Naples, Florida or anywhere you choose to make home.