When you buy something expensive, like a house, you're usually both excited and nervous. For many people, once they've signed their name on the dotted line, some level of anxiety sets in, otherwise known as buyer's remorse.
You might have a case of buyer's remorse if ...
You wonder if you selected the right house
You think that maybe you could have gotten a better deal
You're worried that you can't afford it (even though you have discussed it thoroughly with your lender and the monthly payment is well within your comfort range)
You take comments to heart by friends and family questioning your judgment
Buyer's remorse is stressful, but shouldn't stop you from your home purchase. If you have done due diligence in understanding the home buying process, have saved some money for expenses associated with buying a home, are working with a trusted Realtor and lender, and the home you've purchased meets your most important criteria and fits your budget, your concerns may be unfounded and a simple case of buyer's remorse.
If you start having any of the symptoms above, discuss it with your Realtor and lender. They can help you determine whether you have a valid concern or just cold feet.
Inspectors serve a useful purpose - to identify issues with major systems in a house and inform buyers of items requiring repair immediately or in the near future. It's a good way for buyers to determine whether a house is structurally sound and how much maintenance goes with it. If there's a lot of deferred maintenance, the buyer can either ask the sellers to take care of it, re-negotiate the price, walk away from the sale, or accept the house in its current condition.
Good inspectors are thorough and are able to assess the severity of an issue and describe it without scaring the buyer away from what may be a good house.
A seller I know was happy to get a contract soon after listing his house. The house was in good condition and there weren't any major problems that the homeowner was aware of. It had a new roof and the kitchen had recently been updated. The inspection came back with a large list of items that needed repair including a suggestion to put a roof over an atrium to prevent possible flooding - even though this had never been an issue during the 10 years (and one hurricane) the homeowner had lived there. After reading the long list of issues, the first-time homebuyer decided to cancel the contract even though she loved the house and none of the issues were major. The inexperienced agent didn't help by commenting that the house was obviously poorly constructed.
The seller soon had another contract and was surprised when the second home inspection turned up an entirely new list of issues, some with items that the previous inspector had declared were working as designed and vice versa. This time, the buyer was familiar with home maintenance and was able to put the issues in perspective.
Some lessons:
If you're not familiar with home maintenance, you may need assistance from a trusted contractor to help decipher the home inspection. A home inspector is giving their opinion about what the important issues are and two different inspectors may see things very differently.
Before hiring a home inspector, ask around and find one who has a good reputation for thoroughness and common sense.
Agents who aren't expert in home construction should be careful about drawing conclusions based on a list of issues in a home inspection that they don't really understand.
Who would have thought that a modest home in an average neighborhood without A-rated schools would create a feeding frenzy? But it did. As soon as it went on the market, the showings started and every showing brought an offer! The owners settled on one that brought smiles to their faces with terms that fitted their needs exactly. It's great to know that this can happen even in a slow economy and depressed housing market.
The secret? A combination of hard work, knowledge of the local market, and giving buyers what they want - Value. The sellers put in a lot of effort to get the house in great condition, including a new roof. The kitchen and baths, although small, had been updated and were sparkling clean.
Early on, the sellers consulted with a professional stager whose ideas helped them focus on how to give the house universal appeal. They rented a storage unit and removed many pieces of furniture and items that they could live without for a few months. The house looked like a model home.
Outside, the owner painted the shutters and door in a color suggested by the stager and took pains to clean up the landscaping and add a new mailbox. It took the sellers roughly 3 weeks to get everything in shape.
The house was priced where the local market data showed comps were selling and voila - the offers started pouring in. A home in great condition, with universal appeal, that's priced right will always produce the same results.
Buyers who are working with a Realtor are already aware of the homes competing with yours. They have likely seen (or are planning to see) all the homes that are similar to yours in size and amenities. They are aware of the sale price for homes sold in the last six months - this is a starting place, and because prices are dropping, buyers expect to pay less than what sold previously.
Ask your Realtor to give you a list of homes that are of similar size to yours - everything within 5 miles that's between 200 SQF smaller and 200 SQF larger than yours and examine the list to compare amenities and price. Where do you want your house to appear in this list? Buyers will consider the lowest priced homes first and probably won't even look at the higher priced ones.
Then look at all the homes for sale (wiithin 5 miles of yours) that are in the price range you are considering. How does yours compare to the others in the list?
If your house stands out as a great value from both perspectives, you are likely to get a quick sale. Remember, in a declining market, the longer your house is on the market, the lower the price you are likely to get, so a quick sale should be your goal. If your property is a really good value, you'll get multiple offers and might even get more than the listing price.
You'd think that buying a foreclosure would be much easier than buying a short sale (which requires bank approval that can take 1-3 months), but in some cases it can be just as frustrating and time-consuming.
After looking for months, my clients finally found the perfect home, which happened to be a foreclosure. It was in perfect condition, in a great location, and bigger than anything they had seen so far. It was also at the top end of their budget and being careful money managers, they hesitated for a few days before making an offer. Luckily for them, the interest rates dropped to 5%, making their monthly very affordable.
The bidding process went smoothly and after a week of negotiations, their offer was approved by the seller/bank. Everything seemed to be falling into place and they expected to close in two weeks since their financing was all arranged. But the seller/bank said they required 45 days to close - just a formality, they said, in case any problems arose that required time to correct. Oh Yes.
We were given contacts at the title company in another city (which the seller/bank insisted we use) and contacts at the closing dept of a company that represented the seller/bank and were told, when we asked for status, that there were some title issues that needed to be resolved. After several weeks, we were told that the bank was working on a Deed in Lieu (DIL). This was a big surprise since we all thought that the bank had foreclosed and just hadn't recorded the deed yet.
As the weeks rolled by, the only update we got was that "the bank is working on resolving issues and it takes time".
Toward the end of the 45 days the seller/bank required for closing, we got a notice saying that the contract was about to expire and the buyer was required to request an extension. This seemed like a slap in the face since it was the "seller" who was causing the delay. The buyer was getting nervous because his rate lock was about to expire and getting it extended would be expensive and require funds they hadn't budgeted. We felt like the seller/bank wasn't telling us the real story and I was advised by several colleagues to give it up since they had horror stories of similar transactions that never closed.
About that time, I "happened" to find out that the seller/bank had already taken a DIL three months previously and had "lost" the file. Further research turned up the fact that the seller/bank's attorney had the DIL and was waiting for the seller/bank to give the OK to have it recorded. They said they could go forward if we sent them a copy of the contract, which we promptly did. We then notified the seller/bank reps what we had found out and things started moving.
It looked like it was finally going to work, but other snags dragged it out for an additional three weeks. It seemed like there was some new glitch every other day that WE had to iron out and coordinate between the seller/bank's various departments and representatives, who didn't seem to be communicating with each other.
The bottom line is that it finally CLOSED! My clients got their dream house at a price they can afford and are ecstatic. Ideally, this is the way every transaction should be completed - with a happy ending and very satisfied clients. Was it worth the effort? You bet! The weeks of struggle and frustration were well worth the years of happiness the new homeowners will have raising their family in their beautiful home.
Some people say, "if it was meant to be, then it'll happen". Others have the attitude, that "if they want it to be, then they'll make it happen". I tend to subscribe to the latter philosophy. My clients had a reasonable goal and I felt compelled to help them realize it if it was humanly possible.
Most Realtors know stories about sellers who rejected a low offer soon after their property was listed, and then got offers that were lower than the first or no other offers at all. Time goes by and eventually the seller lowers the price to the amount of the first offer and wishes he had taken it.
Getting any offer in this market is good news, even if it's much lower than desired. This is a tough market and every offer should be considered seriously - as if it's the only one that the seller will get. Make an effort to understand the other side's reasoning and inform them of your own. Keep negotiations going and be willing to give something to the other side with every counter offer to keep them interested.
Buyers today seem to fall into two categories:
1. They are afraid they will overpay and lose money or be upside down
2. They are "buzzards sitting in a tree, looking for something to die" (quote by an investor I met recently and sums up the attitude pretty well)
If the offer comes from the first category of buyer, it's in the seller's best interest to do what's necessary to make it work.
Sellers are afraid of "giving their house away" and buyers are afraid of paying too much. Especially in a declining market, sellers need to be smart and help buyers perceive value. The strategy involves two simple ideas, but takes know-how and hard work to implement:
Attract lots of buyers. The more people who see your home, the higher your chances of getting a good price. A savvy Realtor who has kept up with the times and has the means to market effectively can make this happen. The right price is essential, especially in a declining market.
Give the buyers what they want. Once you get them to the house, give the buyers what they are looking for:
Curb appeal. How Important is Curb Appeal? An attractive exterior that is nicely landscaped will set expectations and either draw them inside or turn them away. This is your buyers' first impression and can make or break the deal. It doesn't have to be professionally done, but does need to look neat and appealing. Exterior of house should look clean and in good repair. Front door and hardware should be in excellent condition.
Little or no work. Maintenance should be up to date, especially roof and HVAC. Make the repairs you know are needed.
Squeaky Clean and no clutter. House looks deep-down clean, especially kitchen and bathrooms. Consider Professional Cleaning (get references). An excellent professional can work wonders and make a grungy bathroom look like new. Rent a storage space and remove everything but the essentials.
Fresh walls and flooring. Paint or touch up walls - get a professional opinion from a stager on colors. Have carpets professionally cleaned. If they don't look good after cleaning, consider replacing them. Giving an allowance for carpets is not a bad idea, but requires that the buyer go to the trouble and effort of having the carpet replaced. Better to pick a neutral color and have the house move-in ready.
Pleasant Aroma. No one wants to smell last night's dinner, especially if it was fish or cauliflower. And worse, a musty smell from a vacant house is a real turnoff. Use the kitchen fan to dispel odors when cooking and use a room freshener - but don't overdo it. You want a faintly pleasant smell, not anything overpowering.
Nicely staged for universal appeal. Each room should have a focal point and obvious purpose. Arrange furniture to make the room look spacious and inviting. Colors and accessories should be relatively neutral, but not boring. Remove photos and other personal knick knacks that you wouldn't see in a showroom or model home. Hire a professional stager, even if it's for a one hour consultation to get ideas.
If you don't or can't do most of these things, you can expect to lower the price accordingly. It's not possible to set an exact amount on what each contributes and each item varies in importance from buyer to buyer.
My experience has been that a (relatively) small amount of money and effort on the part of the seller makes a huge difference to a buyer and can mean getting a much higher price.
This is a simple and effective strategy to get the best price in the shortest amount of time. Since home values are dropping, the longer the house is on the market, the lower its value to a buyer. To get the highest possible price, plan on doing what it takes to sell it quickly.
In an unusually slow buyers' market in a declining economy, a house that has been on the market for four months with two price reductions suddenly has an $11,000 price increase taking it back to the original list price!
There are a total of four pictures, two (almost identical) of the front of the house, one of the carport, and one of the back yard - usually a sign that the inside is in poor shape. The house was built in 1970, so it's likely that the inside is in need of serious updating.
The garage has been enclosed and there's no carport or external storage, another negative for most buyers in this price range.
There is no indication as to the age of the roof, A/C, and appliances, but one can guess ...
The only clue to the price increase is in the confidential remarks that state: "New Paint, New fixtures and carpet to come... looks like a different house".
The house is now priced $10,000 higher than a recent sale in the neighborhood that was in perfect condition and had a garage.
Apparently the broker and seller aren't aware of local market conditions, haven't studied the comps, and don't know that consumers want detailed information and lots of pictures. Granted, this broker is not affiliated with a major real estate company and may not be keeping up with the times.
This is a good example of poor pricing and inadequate advertising, at least for the MLS and Realtor.com, which is the most widely-used non-branded search site for buyers and is fed by the MLS system.
By missing the great opportunity to advertise in MLS, they've probably eliminated roughly 68% of buyers who might have been interested in the house (40% of buyers come from Realtors, 28% from internet).
By pricing it too high, they've probably eliminated ALL of the potential buyers.
A strong offer is one that sellers will consider seriously; it shows that you mean business and provides benefits for both parties. You want to get the best possible deal on a property you've selected, so make a strong offer which is either likely to be accepted or will motivate the seller to open negotiations.
An offer can be simply divided into price and terms (closing date, condition of property, etc. ) - pick one or the other to maximize. Trying to make both price and terms advantageous to yourself will likely offend the seller and make them less likely to negotiate*.
A strong offer has the following characteristics:
- Shows the buyer is serious about buying the property. The size of the binder is a good indication of seriousness and shows you have some skin in the game. A typical binder is 1% of purchase price: less is a weaker offer, more is a stronger offer. A seller takes a risk when they take their home off the market and a higher binder mitigates that risk.
- Shows the buyer is capable of buying the property. A pre-approval letter or proof of funds for a cash offer is essential. Without it, offers may be rejected outright.
- Has a balance between asking for and giving concessions. A strong offer may propose a lower purchase price and balance it with concessions on terms such as a quick closing date (10 days) and accepting the property "as is" without any warranty or repairs.
Conversely, if the buyer needs help with closing costs and wants the property to be in perfect condition when they move in, they can still make a strong offer by giving the seller full asking price with closing costs added on top - assuming that the house is priced at or below market value.
Common sense and an attitude of compromise should rule the day regardless of whether it's a buyer's or seller's market and ideally, there will be an incentive for both sides in every offer and counter offer.
* Expert negotiators such as Herb Cohen http://www.herbcohenonline.com/index.htm advise against negotiating for yourself because it's extremely difficult to remain objective, even if you have excellent negotiating skills and experience.
I believe that Buyer Brokerage Agreements are beneficial to buyers and in many cases, they sign up without thinking twice. For those who have never heard of them before, there can be some hesitation. I ran into an objection recently that is fairly common for those who don't fully understand them.
In Florida, a Buyer Brokerage Agreement is a contract between a buyer and a Realtor that spells out the responsibilities of each and formalizes a commitment to work together. There are variations of the details and requirements in different states, but the main idea is to set expectations and agree on compensation for services rendered.
My new clients were first time homebuyers and counting every penny. They had saved just enough to cover their out of pocket expenses and were uncomfortable with the clause in the Buyer Brokerage Agreement that makes the buyer responsible for paying the full Realtor fee, if the commission offered by the seller doesn't cover all of it.
The benefit to the buyer in guaranteeing the fee is that the Realtor will make ALL inventory available to the buyer, including FSBO's, which usually require significantly more time and effort on the Realtor's part.
When I explained that the commission offered by the seller usually covers the fee and in the few cases where it doesn't, we would write up the contract with the fee as a buyer closing cost to be paid by the seller. That seemed to satisfy them.
What objections do you run into with Buyer Brokerage Agreements and how do you handle them?
Disclaimer: ActiveRain Corp. does not necessarily endorse the real estate agents, loan officers and brokers listed on this site. These real estate profiles, blogs and blog entries are provided here as a courtesy to our visitors to help them make an informed decision when buying or selling a house. ActiveRain Corp. takes no responsibility for the content in these profiles, that are written by the members of this community.
We were given contacts at the title company in another city (which the seller/bank insisted we use) and contacts at the closing dept of a company that represented the seller/bank and were told, when we asked for status, that there were some title issues that needed to be resolved. After several weeks, we were told that the bank was working on a Deed in Lieu (DIL). This was a big surprise since we all thought that the bank had foreclosed and just hadn't recorded the deed yet.
1. They are afraid they will overpay and lose money or be upside down 
Posted by 
In Florida, a Buyer Brokerage Agreement is a contract between a buyer and a Realtor that spells out the responsibilities of each and formalizes a commitment to work together. There are variations of the details and requirements in different states, but the main idea is to set expectations and agree on compensation for services rendered.
;)
;)
