It’s rough out there for homebuyers. Sky high prices, rising mortgage rates, fewer homes on the market and bidding wars are part of everyday life for most buyers these days. The cost of buying a home is up 50% year over year, and it can feel nearly impossible to beat cash buyers and real estate investors, especially for beginners.
“It was so discouraging for a lot of people,” he says Rachel Disalvo, realtor and design consultant at Keller Williams Park Views. “Some apartment seekers can’t seem to win.”
Here are some of the most common hurdles homebuyers face today, with expert advice on how to solve each puzzle and ultimately make an offer that lasts.
1. Not being able to compete with all cash offers
When you’ve finally found the perfect home but don’t have the money to beat the competition, it doesn’t mean it’s game over.
“There’s a saying in this business: cash is king,” says DiSalvo. But “the truth is, most ordinary people don’t have hundreds of thousands or even millions of dollars in cash just sitting around in the bank.”
Samuel Olsen, Olson Group team leader at Re/Max Gold in Reno, NV, says some lenders offer programs that make a funded offer as “good” as cash. But there are also other solutions.
“I tell my buyer clients all the time that just because the seller wants the highest and best doesn’t mean the best offer is the highest offer,” says Olson. “Let’s see what we can control.”
A good real estate agent should try to determine exactly what the seller is looking for. It could be tightened deadlines, contingency waivers, large deposits, or post-closing occupancy, he says.
“See if the seller wants some help with their closing costs — a few grand and an easier transaction can really set you apart,” says Olson. “It doesn’t always work, but when it does, you can really hit a home run.”
And writing a seller-tailored offer can really increase the chances of acceptance when competing for cash.
“If you can’t control the money, you control the terms,” Olson says.
2. Having an unrealistic list of non-negotiables
Nobody should be satisfied when buying a house. But in this tight market, it’s a good idea to look closely at your wish-list for amenities, or your list of non-negotiables, and determine what you can and can’t live without. While a homeowner might yearn for a Pinterest-perfect dream home, it might not exist in this neighborhood or price range.
“Don’t be picky about the little things! It’s great to have a fenced yard for the kids and dog, walk-in closets and a tiled bathroom shower, but insisting on those things will certainly set you apart from the competition,” he says Carol Bullock-Puckett of Re/Max Advanced Realty of Greenwood, IN.
A real estate agent can give you advice on how to prioritize your list of non-negotiable amenities to level the playing field. Olson suggests starting with a “want” versus “need” list and really examining the needs.
“A three-car garage can sometimes mean a two-car garage and a large shed,” says Olson. “It’s so important for the real estate agent to see the why behind the need because there could be an out of the box solution.”
Olson has found that lists of non-negotiables tend to be actually negotiable.
“The fourth bedroom, which the buyer desperately needs, could be fulfilled by a den or even a nook for a workspace from home,” he says.
3. Not being willing to forego eventualities
A contingency is a contractual escape clause that buyers write in their listings. Two of the most common are the loan quota and the inspection quota. In a hot market, forgoing contingencies can make your offer more attractive to a seller (because there are fewer hurdles to jump through to sell the home), but it can be risky for the buyer. However, if you’re determined to make your offering stand out, you might want to consider speaking to your real estate agent about handling contingencies in a responsible manner.
Homebuyers can forego the inspection contingency but still have the home inspected, Olson says. You can even cancel the contract based on the inspections, but don’t expect to get your deposit back.
“The same is true for rating contingency,” he says. “A buyer can forego that eventuality, but if there is a loan, the lender requires an appraisal.”
But be careful – if the home appraisal is low, your lender might agree to only give you that amount, leaving you to pay the rest of the cost of the home.