Is it Sunday again already? These days, Sunday’s seem to come around much quicker than before. Sunday used to be a day that you looked forward to, a relaxing peaceful day that you had to yourself. That was until you decided to buy a house. Now Sunday is a day to run around and see all of the new property listings that came on the market this week. You’re beginning to recognize the other buyers who just like you, have yet to have an offer accepted. They too have reserved their last day of the weekend for the Open House tour.
If you have been trying to buy a house in Pasadena or the Los Angeles area, you don’t need anyone to tell you it’s a Sellers market. Let me restate that, It is a SELLERS MARKET. New listings pop up and then magically disappear. With contract prices exceeding the asking price by 10%, and Sellers getting everything from free rent backs to free pizza, what do you have to do to get a house in this low-interest-rate environment?
Let’s first look at what you may be doing wrong, so in no particular order are 10 Things you may be guilty of:
10 Reasons Why Your Offer is Rejected
- Unrealistic Expectations – depending upon how long you have benin this process, your agent should have provided you with some feedback on the offer that was accepted. If you have not realized the asking price is only a starting point, then you may not be ready to buy. Some people have an aversion to bidding up the price of the home, they refuse to get caught up in that process as if there is a special home waiting out there for them.
This is why we have apartments, for you who think that your “exclusion” is out there somewhere. It’s not, no matter how entitled you may think you are.
- Looking at the Top of Your Price Range – If your lender has approved you for a loan amount up to $500,000, then don’t be looking at $500,000 houses, start looking at hems in the $450,000 price range to allow yourself some room for a counter offer.
- You or Your Agent Never Spoke to the Listing Agent – the listing agent is a great source of information and may impart some wisdom on you, but you have to ask first. Simple questions such as how many offers do you expect? when will you look at offers? where do you think the final selling price will be? Take this information and decide if this is worth pursuing, chances are it may not be. There is no award given for wasting your time on a task that will not materialize.
- The Open House – not introducing yourself to the agent hosting the Open House can be a big mistake. Introduce yourself, tell him or her if you have an agent, but don’t try and act indifferent and attempt to create the we can take it or leave it impression. This will denote weakness, and if the agent senses you are not serious about your offer or the property, then you have no grace.
- You Submit a Poorly Written Offer – usually it’s best to have your agent bundle everything together in one pdf and submit. If your agent is sending 5 emails to the listing agent with one document at a time, you might as well forget it. Imagine receiving 15 offers and you have one or more agents who cannot get it together, and keep hitting “send”. You make the listing agents job difficult and you catch the train to the bottom of the list.
Early in my sales career my manager told me to make the process easy for the Buyer. Better yet, have your agent hand deliver your offer package, the documents will be neatly organized and easy to read. If you are working with an agent who still faxes, I got nothing.
- You’re Not Ready – has your lender run your credit, received your supporting documentation, ready at a moment’s notice to send a pre-approval letter? If you think you are getting all this done by Monday morning, you might reconsider since you already know what you will be doing next Sunday.
Also if your plans include buying a home with an FHA Loan (3.5% down) or perhaps a conventional loan with only 10% down, your odds have just increased. In a market where home prices bid up like the recent cost of gasoline; high loan to value loans become risky and the listing agents job is to reduce the risk of the Seller.
Being ready also means being prepared to place the winning bid. These days many homebuyers who are ultimately chosen are the ones that have lost several homes in the past. It’s that mindset that says “I am not going to lose this one and I will make an offer that supports my commitment to this property, which could mean possibly $50,000 or a general guideline of 10% over the asking price. This is probably the hardest one of all, convincing yourself that this is what it takes to become a homeowner. Not only is the financial commitment hard to accept, but the process you go through mentally convincing yourself it is the thing to do. There is a real emotional/rational battle you go through, so a little bit of advanced planning will come in handy. Set a maximum amount you are willing to overbid and stick with it.
- Your Offer has too Many Contingencies – contingencies to a home seller mean one thing, you have an opportunity to back out, to change your mind, to allow the Seller the opportunity to go through the selection process all over again. Consider which contingencies you can live without or consider shortening them. This makes your offer stronger and gives you more credibility.
- No Love Letter or not Personal Enough – who doesn’t like receiving a love letter? This is your chance to blow some serious smoke right up the sellers ass. This is the medieval caste system, the Sellers are Royalty and you, a lowly surf.
Here is your chance to get knighted, connect emotionally, tell them it is like the house you grew up in, pick out a fixture in the house and tell them how much you love it, what it means to you, that you will take extraordinary care of the home. I think you get the message here. Include a colored picture of the family and pet. Doing this will get you seated at the Round Table.
- Coming to all of the Open Houses and Staaaying – hanging around the Open House, bringing all of your friends, your family members and hanging out to see who else is interested is annoying. You may be keeping the agent from talking to other prospects and if you do this you will soon find your name on the “other list”. Once you have your offer accepted then you can do all of this, BUT not until then. It’s not yours, so quit acting like it is. It worked for Obama in the Presidential elections, but you’re not Obama.
- Make your Offer Compelling & Memorable – consider this the agent has 15 offers to review with the home sellers tonight after they get home from work and feed the kids. Ask yourself one simple question, “What did we do to make the Sellers remember us and chose our offer”?
Have you ever heard of The Law of Reciprocity? It basically states that when you give someone something, they will fell compelled to give you something back. So does that mean a $500,000 property for a $100 bottle of Champagne? Who knows, but it’s worth thing to stack all of the odds in your favor and in a competitive market, every little bit you can do, helps your cause.
For most of you or 99%, the answer will be a simple…NOTHING. Here is your chance to shine and present the sellers with a memorable token. Did you see liquor in the house, buy a bottle of champagne, have a pizza delivered, order a flower bouquet.
Look at it this way, that $500,000 mortgage for 30 years is going to cost you about $1 Million. What’s another $50 – $150 dollars? Think big. Think Memorable, Think Connection
Is There Any Light In This Tunnel?
It is likely the home buying frenzy will eventually subside and the competition will begin to slow down. In times past, this has happened around September. Fall means the kids are back in school and demand slows down. Inventory levels may dip some, but based on past clients experience, the latter part of the year does seem more conducive to finding a home that is suitable both in terms of amenities and price. At this point you also may be asking yourself if waiting to buy means higher prices?
Usually when demand begins to soften price appreciation begins to slow and you are not likely to pay any higher for that home you have been waiting for, provided you can wait just a few more months.