Common Home Buyer Mistakes
Many home buyers mistakenly think that they are protected by using a “Buyer’s Agent“, or a mortgage broker who will “find them the best mortgage”. When I ask them who is paying the buyer’s agent, they respond with “They just get a percentage of the sales price”. OK, and how is this different from a seller’s agent? You can put a sheep’s clothing over a wolf, but it’s still a wolf. The higher the selling price of the house, the more commissions are earned by the seller’s and buyer’s agents. Another common mistake home buyers make is thinking the price in writing is set in stone. The pen is mightier than the sword and sellers use it to their advantage when selling houses. But you can bypass this common buyer’s mistake by adopting a counter intuitive method of thinking.
Just remember this one important rule:
Sellers do not set the price, it’s the buyers who set the price
How many times have you sold or traded in a used car and not gotten anywhere near what you wanted for it? This is because you thought you could set the market, but the market told you otherwise. Whether it’s a house or a car, the market sets the price, not the seller. Once you get past this mental roadblock, you’ll find it much easier to offer much less than the asking price. The stock market is a good example. If you were unfortunate enough to buy the over hyped $150 “dot bomb” stocks in early 2000, you soon found they were selling under $1. Although you wanted $150 when you sold them, no one wanted your shares, and you suffered a huge loss. Houses are the same and many sellers are under the wrong impression that real estate must appreciate. There are no rules of what appreciates or depreciates. So don’t be bashful about offering a low price on a house. Some homeowners who are selling their homes get the idea in their head that their house should sell for say $200,000 because they bought it a few years ago for $175,000.The seller may become indignant when you present them with a low ball offer. They may have bought the house when the market was hot, and in a soft market, their house may not be worth the asking price.
Don’t buy a house in an urgent rush
Don’t wait until the day you have to move out of your old house or get transferred to buy a house. You need time to carefully plan your purchase. It can take 2 months or more to get an agent, shop for the house, get approved for a mortgage, and close escrow. If you know you will be relocating and need a house soon, you should start looking now, because you don’t want to be pushed up against a wall and forced into making costly and hasty decisions with adverse financial ramifications that will come back to haunt you. Just like buying a car, do not wait until the old clunker dies before buying a new car. If your car is dying, you’ll be forced into making hasty decisions and signing deals you should never have signed. Never let a dealer know you are desperate for a car. If the sellers know you are desperate to get a house soon, they will not drop the price. This little mistake can cost you thousands. Always make the sellers think you have plenty of time and resources to analyze each deal carefully. Make sure they know you are the one that they have to chase. then the deal will proceed on your terms, not theirs.