Emotional mistakes are common among homebuyers, particularly first timers. Here’s a list of common errors and tips on helping your clients navigate the unfamiliar terrain.
Always looking for a better deal.
Every market has its up and downs, but many homebuyers make the mistake of thinking there’s a better deal just around the corner.
The antidote is to help your buyers do their homework, understand value in their neighborhood and let them know that in the current upbeat market, today’s purchase will be more expensive tomorrow.
Falling in love at first sight.
The rush to buy is understandable for those waiting to get out of a less than perfect situation. But buyers who purchase the first property they see may overpay, minimize serious condition issues or become remorseful later on when they take off the rose-colored glasses and see what else is available around them. None of the outcomes will reflect well on you, and you may end up losing a valued referral source or worse, gain an anti-referral.
The solution is to make sure buyers look at no less than five properties before signing any contracts and to maintain a realistic attitude in the face of their enthusiasm.
Overpaying for perfection.
In the remote chance that a buyer does find perfection, the emotional attachment will sometimes become so high that the buyer will overpay or overextend themselves financially.
Remind buyers that they have to think of their current finances as well as their exit strategy with each acquisition to avoid losing money when they sell. Affirm the enjoyment value of the perfect home but be clear about the risk and investment value over the long haul.
Equating a short sale with a deal.
The terms “short sale” and “real estate owned,” or “REO,” are marketing buzzwords designed to lure bargain-hungry buyers.
A good deal, however, is a matter of the property’s historic price, current market conditions and the home’s features, as well as the buyer’s own needs. Weighing all the factors isn’t easy.
The solution is comps, comps and more comps. These will help your clients see through the marketing hype of buzzword terms designed to pressure buyers to act fast.
All homebuyers want the lowest possible price, but there’s a big difference between firm negotiating and lowballing.
Lowball offers run the risk of being rejected out of hand or lengthening the process and annoying the sellers. Either way, buyers who lowball run a big risk of losing the property.
While all buyers are capable of lowballing, it’s a problem especially common among cash buyers who don’t need to borrow money. Such buyers are more attractive, especially to sellers who need to move quickly, but often the cash discount isn’t worth as much as some buyers think.
A good way to counter the urge to lowball is to share with clients recent sales and bidding histories of homes nearby (you can keep names and addresses confidential). This will help them understand the high rejection rate of lowball offers and feel comfortable with terms more likely to get them the property they want.