People hoping to purchase residential real estate have a long road ahead of them in many cases. First, they need to find an agent and get pre-approved for a mortgage. Next, they have to identify properties that might fit their needs.
After finding potentially workable properties, those hoping to buy real estate then need to tour the homes, put together offers and negotiate with sellers. A lot can go wrong during that process, especially if buyers make one of the three common mistakes outlined below.
How do buyers potentially put themselves at a disadvantage when making offers?
1. Relying on a love letter to stand out
For decades, agents recommended that buyers write a personal letter to the seller if they felt strongly about a property. Unfortunately, the details included in such letters often include personal characteristics that should not play a role in real estate transactions.
The letter might reveal a buyer’s race, which could subtly influence the decisions made by the seller. That, in turn, might result in allegations of an unfair transaction. Sellers and their agents may set aside the letters without reading them or even eliminate an offer to avoid allegations of unfair conduct.
2. Offering too much
Making the most aggressive offer possible based on financing might help a buyer stand out from the crowd. However, they may not be able to close on the property if the offer is too aggressive.
If the appraisal required by the lender comes in at a lower value than the amount offered, buyers may have to cancel the closing. Other times, they have to renegotiate with the seller or scramble for last-minute supplemental financing.
3. Waiving all contingencies
Another way that buyers try to stand out from the pack is to fully commit to the property when they make the offer. By foregoing the inclusion of contingencies, buyers leave their earnest money at risk.
Unfortunately, an issue with the inspection or a sudden job loss might mean that the buyer can’t complete the purchase. They could then theoretically lose thousands of dollars if the seller retains their earnest money.
Having support and guidance throughout the real estate purchasing process can make a big difference. Custom documents and a professional who can review the final paperwork can help protect buyers in what can be an unpredictable and risky market.