I have recently been in contact with a few buyers in my market. What I am discovering is that buyer's expectations are now even worse than what seller's expectations were last year. In 2004-2005, sellers felt that they could ask for what ever they wanted for their home, and probably get it. There was a huge under-supply of homes on the market, and buyer's were desperate for anything.
Now that the tables are turned however, I find that buyers can be just as unreasonable as the sellers of yesterday. Whereas sellers in 05 were asking prices that were commensurate with what the market would bear, and were sometimes asking for about 10% more than the market would bear, their demands were not totally off the mark.
However, many buyers will have very unreasonable expectations of what the seller will accept. We keep reading about how buyers and sellers are at a stalemate, each biding their time: sellers want more, buyers want to pay less. I believe that one of the issues that is contributing to the climate of hostility is that buyers want to pay a lot less.
It is now very common for a buyer to write a contract on a $400,000 home, and the offer will look something like this:
Offered price: $360,000
Earnest Deposit: $1,000
Seller to Pay 3.5% in Closing Costs
Seller to Pay Appraisal Fees
Seller to Pay Home Inspection Costs
Now, I don't know about you, but I would not write an offer like that. That's not even close to operating in good faith. It is a slap in the face of the seller, and also lets them know that the buyer is not seriously comitted to the process. It creates a climate of fear and mistrust right from the word go.
What's worse is that you are likely to come across a buyer who would like you to show them a BUNCH of homes, then ask you to offer ridiculous prices on their TOP 3 PICKS!! It's the shotgun effect: throw a bunch to the wall, and see what sticks. Not only is this a violation of the Realtor Code of Ethics, but is just bad faith dealing all around. The seller knows the offer is not serious, and the buyer will likely end up moving to the next deal, just repeating the process as they drag their hapless Realtor around town looking for someone to take advantage of.
Therefore, it is becoming more imperative than ever that you meet your buyers in person, preferably in your office, to explain the process of buying a home, and what you will expect of them. Remember that the buyer/broker exclusive employment agreement is just that: a contract between you and them. It is certainly okay to have your own set of guidelines that delineates their own obligations within that framework. Let them know what you expect. Ascertain whether they want a home to live in, or whether they want something cheap to flip when the market begins to rise again. With buyers and sellers now thinking like investors, it's time to take the market back to the idea of buying a home to LIVE THERE, and move when their needs change.
We need to be doing a good job of educating both our buyers and our sellers right now. Otherwise, our markets will not likely experience any stability for some time.