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Bye Bye, Buyer's Market: Tips for Working with Clients Who Can't Land a Home
By Zoe Eisenberg
It's official: the buyer's market is behind us. With the market improving, the real estate industry is abuzz with positive news every day. While increasing prices and multiple offers may be a dream for a seller, it may be a nightmare for a buyer.
"The latest Homes.com Local Market Index continues to show encouraging trends, with pricing gains month over month and year over year," says Brock MacLean, executive vice president of Homes.com.
"Adding to this momentum, the ‘Homes.com Rebound Report’ reveals how the housing recovery process is unfolding across the country, measuring how far each market has recovered from its peak to its greatest drop in index value,” adds MacLean. “The latest Rebound Report indicates 14 of the top 100 markets have fully recovered from the 2007 Great Recession, up from nine as reported in the previous months report."
More and more hopeful homeowners are entering the fold, but with markets across the country showing scant listing supplies, and investors purchasing multiple properties at once, it's becoming increasingly difficult for buyers to beat out competition and successfully land a home. Many homes are receiving multiple offers, and the once forgotten bidding wars are becoming a commonality again.
These struggling buyers aren't what you'd expect: those with a shaky credit history or a former foreclosure. Most of these buyers are well qualified, and yet still searching for a home for months, and possibly even years.
A recent Century 21 survey found that 33 percent of buyers currently searching for a home have been on the hunt for more than a year.
According to the survey, 33 percent of those searching for a home have been hunting for over a year, and 67 percent have been searching for up to a year. Of those looking, 42 percent have made an offer in the past six months, while only 11 percent have had their offers accepted.
If you have clients who are struggling to close on a deal, here are a few tips to both encourage them, and ensure their success:
Get Them in a Decision-Making Mindset
In terms of transaction success, there is nothing worse than waffling. One of the most important things you can do for your buyer is to get them into a decision-making mindset, real estate coach Verl Workman notes.
Workman suggests the following dialogue: "If we go out and look at homes on Saturday and you find one you like, are you ready to start making offers?"
If the answer is no, don't take them to see the homes. This will force them to be serious before they begin looking, will improve their chances of actually landing a home, and won't waste anyone's time.
Don't Bother Low-Balling
The seller won’t take your client seriously, especially if they are getting a flood of offers from other interested buyers.
If your buyer is repeatedly having their offer rejected, or just can't settle on a home they want, their expectations may be too high. While no one should buy a home they don't love, it may be your job as the agent to have them reevaluate wants and needs, and get their expectations in check.
Can They Go Cash?
Making an offer in cash is the top way to get your offer accepted, and increasing in popularity. A staggering third of all homes purchased in Los Angeles during the first quarter of 2013 went for all cash, compared with just 7 percent in 2007. While it's typically investors who can pull off a cash deal—not your average buyer struggling to find a home—it's always an option to run by your buyer.
Can They Offer above the Asking Price?
Perhaps your buyer can't afford to go cash, but they may be able to submit an offer above the asking price, which can help them win a bidding war should one occur. This can also help put them on the same level as competing buyers who are ready to offer cash, but not cash above the listing price.
Remove All Doubt from the Seller
“The most important job a buyer has, along with the help of the buyer’s agent, is to remove all doubt from their offer,” says Lawrence P. Finn, III Coach REALTORS®. While this may seem obvious, it's startling how many home offers are rejected due to incomplete financials, or other issues.
“Many offers often contain gray areas or unanswered questions about the purchaser’s ability to obtain financing, or their ability to close in a timely manner,” continues Finn.
Represent Them Well
“To help our frustrated buyers, the most important thing we can do is to start truly representing them again,” says Workman. “Faxing or emailing offers to a listing agent who doesn't know your buyer or their situation is a lazy approach that doesn't offer real value or representation. Become a true buyer’s agent and present their offers whenever you can and tell the story on their behalf,” says Workman.
“Selling and buying is about so much more than just the numbers. Bring emotion to your offers,” says Workman.
Have your buyer write a love letter to the seller about why they can see themselves in this home. Include a photo of the buyer's family.