It’s a very difficult market for home buyers. Most are extremely frustrated from viewing homes and the emotional roller coaster ride of writing offers, being countered and ultimately losing out on their dream home. So why are they missing the real estate boat?
There is a lot of competition due to some highly qualified home buyers. The top three reasons a buyer’s offer is not accepted relates to the buyer’s down payment. A buyer with a hefty 20% down payment is competing with cash buyers and others with even larger down payments. I have several clients with down payments of 30 – 40%. These buyers are in position to waive contingencies (appraisal and loan):
1) Low down payment
2) Appraisal contingency (can’t waive)
3) Loan contingency (can’t waive)
The next reasons are the buyer’s inability (or unwillingness) to be flexible:
4) Not offering to wrap up the investigative contingency in 5-7 days
5) Not being flexible with seller’s time frame (when does the seller want to close)? Does the seller want to remain in the home after closing for a week or so (or even longer)?
Additional reasons a buyer’s offer won’t be accepted relate to their choice of lender. In today’s competitive real estate environment most offers to purchase a home are accompanied by a prequalification or preapproval letter. Many listing agents will contact the buyer’s lender. One, we want to ask questions, and two, we want to be assured that the lender will work with the listing agent to facilitate a smooth closing.
6) Lender doesn’t return phone calls on the weekend
7) Lender won’t talk to listing agent
8) Lender has poor reputation (think Bank of America)
The final reasons a buyer’s offer doesn’t have a snowball’s chance of acceptance is due to their choice of Realtor. Structuring a real estate offer takes skill.
9) Inexperienced agents, have not yet learned how to structure a winning offer. Lending guidelines are constantly changing, part time agents and those new to real estate just don’t have the experience.
10) Their agent is not available (perhaps they are out of town or at Disneyland). The seller and the listing agent likely want to wrap up the offer process and open escrow. If your real estate agent is a solo agent and off the grid, the seller will likely move on.
When competing in a multiple offer situation, the seller’s agent wants to select the offer/buyer/Realtor which will close escrow at the highest price, with the best terms and without drama. A buyer in the position to waive their appraisal contingency or one paying cash has a tremendous advantage. Homebuyers competing against these stronger buyers must be very flexible on terms… and be patient.