Have you put in several offers on homes only to come out of it without a place to put your welcome mat? You aren’t alone. On average, it takes about four times for a first time buyer to put a home under contract, so don’t feel completely defeated. If you’re getting ready to start your home search though and don’t want to go through the anguish of having four contracts rejected consider making a slight mind shift.
What do I mean by mind shift? The constant paradigm between buyers and sellers is that sellers want to make money off the house they’re selling and buyers don’t want to overpay for a home. HGTV and shows like Property Virgins have made it seem like making an offer is as easy as snap of the fingers and getting a home for less than list price is the norm. Depending on the state of the market either the buyer or the seller will have a slight advantage. I personally like to get everyone to meet somewhere in the middle.
Right now we’re in a bit more of a sellers market, giving them a little more of the advantage. Homes are going for more than asking and there are often multiple offers. So if you feel like you just can’t seem to get a home take a look to see if you are making these assumptions and creating a mental block that might be keeping you from writing that winning offer.
“They shouldn’t be making that much money on this house in that amount of time.”
In the age of information it can be easy to make judgments on the information you find about a home and it’s sales history. You can’t look at the history of the home and decide someone shouldn’t make a certain amount of money on it, though.
Tax records can be incorrect
You don’t know the owners financial situation
You don’t know the work or renovations that have been done in the home
You don’t know they buying situation the seller had previously. (They could have technically bought the house from Aunt Sue last year according to tax records but really they bought it in cash five years ago.)
“It doesn’t look like they’ve made any upgrades. I’m not paying that for this house.”
Sometimes the updates a seller made are ones you can’t see. Depending on the age of the home they may have replaced the roof, the HVAC system, the water heater, the electrical, the water piping, or even installed an entire duct system. Sometimes a home with structural and mechanical updates is worth more than home with cosmetic updates. Before making those judgments have your agent reach out to the seller’s agent and ask about those mechanical items.
“The seller’s always cover closing costs.”
It may be common on television to see couples ask the sellers to cover closing costs but the sellers covering closing costs takes money out of their pocket. For example, you offer a seller $5,000 under their asking price (no biggie, right?) and then you also ask them to cover closing costs, so another $5,000 on average. You really have offered them $10,000 under their asking price because when everything is said and done they automatically are cutting $10,000 out of their profit, which in some cases could be the only equity they had in the house.
How to Avoid These Contract Killers
Your goal should be to buy a home at a fair price. To do that you need to determine the value of the house based on the statistics of the market, data of the home and your “must have list.” YourREALTOR® should be able to explain the current market conditions (buyer vs seller market, average DOM for the area you’re looking in, etc.) and then be able to compare that to the home you’re look to purchase. Remember to consider all the facts and then make an offer that will win you the house of your dreams, or at least your best first home.