As housing inventories thin across the country, some buyers have become more desperate during the home buying process. While acts of desperation may work from time to time, many of them backfire.
Making offers before seeing properties
Some home sale transactions now may have an agreement in place in just days. In certain local areas, individual properties receive up to 20 different offers. As a result, some buyers are making offers on home before they even take the grand tour, according to Realty Times. These are “sight-unseen” offers. They often come with a contingency that buyers set timeframe that they must look at the property.
However, once buyers get around to looking at the homes, they are often dissatisfied. While this may not seem like a big deal, it can be a waste of time, and unfortunately, time is money for both parties.
Don’t make exuberant offers
Making an offer well above the asking price of a home can also be very risky. In fact, this partially led to the real estate bubble that burst nearly six years ago, leaving the market in its current state.
Although a high offer might win the attention of a seller, your lender will certainly request a home appraisal. This will get an assessment of how much the property is really worth. Once this number comes in, you will probably have to cancel the transaction if the appraisal does not support your offer.
Meanwhile, there may be a few exceptions to this tactic. If you plan to purchase a home in an all-cash deal, you have the right to offer as much as you are willing to pay, even if it’s well above market value. It’s your money, not the bank’s. However, if you chose to sell one day, you may have to take a loss on your investment.
Don’t offer unrealistic terms
One of the main unrealistic terms some buyers put forth is the amount of time it will take to complete the transaction. For a seller, the shorter the process is the better. As a result, some buyers give them unrealistic timeframes just to grab their attention.
This time estimate is a contingency period. It’s often based around home inspection and financing timelines. With a surge of buyers scrambling to capitalize on record low mortgage rates, mortgage professionals are dealing with serious backlogs. This has significantly expanded the amount of time it takes to complete either of these tasks.
Telling a seller the process will take a short amount of time and then taking much longer could set a negative tone. In addition, your inability to follow through on a quick closing could bring the entire process to a grinding halt.
Qualifying for a home loan is a major step in your personal finances. Freedom Mortgage is here to keep you up-to-date on the latest tips and tricks of the mortgage industry whether you’re looking to improve your home value or simply make a mortgage rate comparison.
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