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Why Tons of Buyers Are Screwing Up

Reblogger
Real Estate Agent with eXp Realty

This is becoming all to common.  Transactions are not progressing towards a close because someone may feel the need to be "in control" or make the other party feel as if they are nothing.  Unless a home is simple trash and not worth being on the market period, if a buyer thinks highly of enough of a home to make and offer, then realistically there is not reason for the deal to fall a part.

Original content by J. Philip Faranda License # 49FA1074963

Luke's first train ride. He got a window seat. Price and Terms. 

Price. Terms. 

I will bet you a 6-pack of Old Milwaukee that if you ask first-time buyers what the term "terms" is that a bunch of them would screw it up, maybe because their buyer agent is a glorified door unlocker who is a payment behind on his car. But that's another post. 

Right now, thousands of buyers across our great land are poisoning their prospective home purchase over an appliance, a repair to an electrical panel, or less than 1% of the price of the home. Because, after all, it is a buyer's market.  What is a buyer's market? Well, to a carrier pigeon buyer agent who won't properly advise their client out of fear of losing them, it is whatever the buyer wants. And typically, the uninitiated buyer will subjugate the seller to their will to get a great deal. And why shouldn't they? Sellers were making buyers waive inspections, come up with extra cash with under appraised homes and equally insane things 5 short years ago. Point conceded. And if buying a home is a tit-for-tat event for you, read no further. But if you want to buy intelligently, read on. 

We got off track in the earlier part of this decade by calling homes great investments. Everyone bought that. Later in the decade, homes became bad investments, and almost nobody bought. So I don't begrudge anyone for taking a wait and see attitude. Yet homes are like insurance. They can behave like investments, but they serve a greater utility- while you hope to never actually use life insurance, you do use your home as a place to live. It isn't a cold asset. You derive utility from it. Live within your means and you are OK, as many prior generations will attest.  

Any honest perusal of my blog will attest to the fact that I have never had a mantra of "Now is the time to buy!" I am rethinking that. 

About a year ago, some guy was featured on Active Rain advising people not to buy a short sale because they were going to miss some narrow window of opportunity for historically low rates. Those rates were higher than they are today. With current rates so low they are starting to resemble Mariano Rivera's earned run average, too many people are missing the train because they want a window seat. They have to dominate the seller or no deal. And that's a shame. Right now, the monthly payment on a 15 year mortgage is just a tad higher than the payment on a 30-year mortgage 3 short years ago. If you throw an extra payment or two in annually, you could pay your house off in 10 years. 

I have witnessed buyers lose fantastic deals on homes that have everything they wanted over a $5000 difference on a $600,000 home. The seller had the temerity to attempt to negotiate. Bad seller. No sweat off my back; I have a home and if my company were going to go under it would have a long time ago. There is no one buyer I need. But these people need a home. They can't justify the move until they have subjugated the seller to their absolute will, and if the seller won't submit, they are banished. The buyer keeps hunting. Here's why that's crazy: the town crier won't announce when the market bottoms out. Nor will he let us know when rates will rise again

A 3/8 percent rise in rate over the period of the loan will dwarf that $5000 buyers still want from the seller after rounds of offers and counter offers. The riding mower or the chandelier won't pay that extra money, but many of today's buyers aren't thinking of that- they feel a societal-driven compulsion to chew sellers down ever more. I don't blame them for being this way. I blame their agents for not educating them about local conditions. I blame the NAR for running bland commercials that sound like 1970's era Amway commercials that build trademark recognition and little else. It is only a good deal if the seller actually agrees. If you are making offers on your 3rd or 4th house, wake up- if your agent won't say it, I will. Sellers have never been this motivated. They just dislike being your gimp. Smart business people don't have their trading partner humiliated. Magnanimity is not weakness. 

I would advise buyers to get on the train. With the terms available now, you are in the best position any of us have ever seen. Be happy you have a job and a down payment, don't kvetch about not riding in the conductor's car, and rejoice that you are one of the fortunate few when you arrive.  

Feed your mind.

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Comments (5)

Dr. Paula McDonald
Beam & Branch Realty - Granbury, TX
Granbury, TX 936-203-0279

Great re-post.  I have unfortunately been on the listing side with many of these buyer's agents who are really killing deals.  They are not guiding their clients about the reality of the market and in my opinion are not truly representing their client's fiduciary interest.  Irks me to no end.

Nov 08, 2010 01:45 AM
Charita Cadenhead
eXp Realty - Birmingham, AL
Serving Jefferson and Shelby Counties (Alabama)

Paula that is the reality that we live in.

Nov 08, 2010 01:47 AM
Charita Cadenhead
eXp Realty - Birmingham, AL
Serving Jefferson and Shelby Counties (Alabama)

Valerie it just makes you wonder when it will all end.

Nov 08, 2010 02:31 AM
Dave Halpern
Dave Halpern Real Estate Agent, Inc., Louisville, KY (502) 664-7827 - Louisville, KY
Louisville Short Sale Expert

Great reblog!

The short sale seller is in survival mode and typically needs their personal possession items. The buyers sometimes play the blood sport of asking for the the children's toys, the lawn furniture, and every appliance including TV's. We even had a buyer demand in the contract that the seller mow the grass the day before the closing to save the buyer one mowing cycle.

The buyer is in no mood to be antagonized by such pettiness. It also ruins the reputation of the buyer's agent. That agent will forever be associated with a contract that had out of control demands.

Nov 09, 2010 10:35 AM