Many homeowners with mortgages have considered refinancing at some point or another. Refinancing a mortgage essentially replaces your current mortgage with a new loan. It's an especially enticing
8 Times Bargain Hunting For A Home Can Backfire
Everybody loves a bargain. But getting one handed to you, gift-wrapped, in this housing market? Fat chance.
Limited inventory has boosted prices, and in many cities, sellers have the big end of the stick. It’s rare to see buyers scoring a fabulous house in a desirable neighborhood for thousands of dollars under asking price.
So to save some cash, you might feel compelled to make some compromises, try to negotiate, and look for the hidden bargains.
But beware of taking your thriftiness too far—because you just might regret it. Read on for eight times bargain hunting can actually backfire.
1. Working alone instead of with an agent
Thinking of just doing this thing on your own? Don't.
“When we talk to clients about the deadly mistakes home buyers make when purchasing a home, No. 1 is buying a home without representation,” says Brian Cournoyer, a Realtor® with DeSelms Real Estate in Franklin, TN.
First, it's important to know that you won't save anything by skipping the buyer's agent, because that cost isn't on you. Typically the seller pays the commission for both the seller's agent and the buyer's agent.
And if you consider yourself a master negotiator, or think you can search for homes just as well as the next guy, know this: Agents have a host of training and tools designed to find the right properties and get you the best deal.
“Everyone thinks they can go online and pull up comps, but they don't have access to all the real-time information that agents do,” Cournoyer says.
2. Assuming you can get a deal on a short sale
OK, so most sellers are in the driver's seat. But what about sellers who need to offload their home fast? There's gotta be some of those out there, right?
Jen Birmingham, a Realtor® with Coldwell Banker in Petaluma, CA, says one of the biggest mistakes she sees is people counting on short sales to snag a bargain.
“Because home values are way above where they were when a lot of people were underwater, short sales are few and far between right now,” she says. "Buyers need to know that what was working six years ago is no longer applicable.”
3. Making big compromises just to score a deal
Buying a home that doesn’t have enough bedrooms, is located two hours from your work, or needs a mountain of money to make it livable is no bargain, even if its list price is far below your budget.
The trouble is, in a hot market, buyers often ignore these blazing-red flags, Birmingham says.
“What I see is a lot of people wanting so desperately to get into the market that they’re willing to make compromises that may have originally been deal breakers,” she says.
Think carefully about your must-haves, and do your best to stick to the list.
4. Hiring the cheapest inspector, or none at all
While it might seem economical to skip a professional home inspection, be aware that what you save now you’ll probably pay for later, Cournoyer says.
In older homes, an inspector can discover problems such as termite infestations or crumbling foundations. Even for new builds, it’s wise to hire a pro who can spot material defects or unfinished work in out-of-the-way areas such as crawl spaces or roofs.
“For instance, we have some pictures taken by an inspector that we show clients, where builders left a sheet of 4-by-8 plywood over the top of the chimney,” Cournoyer explains. “If we hadn’t had that inspected, this house may have burned down when they built their first fire.”
And there's a double whammy: Forgoing an inspection also means you lose the ability to renegotiate if, say, you notice evidence of a leaky roof during the final walk-through.
5. Requesting an endless list of inclusions
Back when buyers held court, sellers routinely ended up including major appliances and other household goods in the contract. Anything to seal the deal, right? Well, those days are long gone, Cournoyer warns.
“Buyers tend to lose touch with reason a little bit, and think they should get everything,” he says.
Want to win that house? Make your asks equal to the price you're offering.
“If you want to offer up a whole ton of money, you can be a little more high-maintenance," Cournoyer says. "But when you’re out there searching for a bottom-of-the-barrel deal, you'd better just be asking for the house and that’s it.”
6. Insisting on unreasonable repairs
Certainly, if the home inspection turns up a major issue requiring immediate attention, buyers should ask that a repair be done prior to closing. But don’t assume a seller needs to revamp the entire property or make cosmetic changes.
“I had an experience recently where the buyers wrote out a huge laundry list of requests for the seller,” Birmingham recalls. “It was a really nicely flipped property, yet the buyers were still asking for more customization. The seller had put on a new roof, and they wanted two skylights installed.”
When Birmingham suggested this could anger the seller and limit their chances of getting the home, the buyers wouldn’t budge. Guess what? They didn’t get the house.
“The seller had three other offers, and didn’t want to deal with my buyers because their demands were so off the wall and unrealistic,” she says.
7. Making a lowball offer on a home that’s been languishing on the market
Some buyers figure that any listing that’s been up for more than a couple of weeks must have a desperate seller behind it. But, Birmingham notes, a low offer will not only cost you credibility in the seller’s eyes, but could also spark a bidding war.
“Usually when a house is on somebody’s radar as a bargain, there’s somebody else that has the same feeling at the same moment,” she explains. “So you’ll usually still be in competition in a multiple-offer situation.”
Speaking of which…
8. Employing the wrong strategy in a multiple-offer situation
When you’re one of many offers on the table, it’s important to stand out in a positive way, Cournoyer says.
“Agents have a few tricks we can put in the offers that help us rise to the top of the pile,” he says. “Yet we see buyers who don’t submit clean offers—making (contingencies) on a home sale, for example—which clutters up a contract.”
Birmingham agrees that ignoring your agent usually means missing out on a house.
“In most situations, if the house is priced properly, a good Realtor is communicating with the listing agent about how many offers are coming in,” she explains.
“Buyers really have to be ready to step up with an above-asking offer if they want the house," she adds. "Sometimes, it takes a few losses for buyers to understand that process.”
For Mark Ross, founder of Ross NW Real Estate and professional real estate broker, real estate has always been the career of choice. During his 25+ years in the industry, Mark has gained experience in....
Latest Blog Posts
Living in a community managed by a homeowners association (HOA) means that you're obligated to follow certain rules and regulations. Depending upon your HOA, these rules can be very particular—so
Thinking about buying a fixer-upper? Join the club. Blame it on the popularity of renovation reality TV or just the fact that people are searching for deals, but many home buyers are willing to
Millennial home buyers are going to some troubling lengths to foot the bill for their first homes, according to a new survey.Millennials are more likely than their older counterparts to fund their