Sneaky Buyer Tricks In a HOT Real Estate Market….Deerwood Realty and Friends…Ep. 47

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Intro: It’s really tricky to buy a house right now….this particular article out of Nashville shows some of the tricks Realtors are using to get their buyers into homes.

1. Buyers are using cash So, why does cash matter over a mortgage? It’s in the way the mortgage process works. If you agree to buy a house in cash, you can eliminate the appraisal contingency…so a home seller that doesn’t have to worry about the appraisal is better than one who does. However, two things can happen even if you have financing
a. You can get an appraisal and agree to pay the difference in cash
b. You can agree to pay in cash and then get a mortgage.

2. Offer submitted before showings I’ve heard of this, but I would never advise my clients to do so. The trick here is to put in an offer the minute the house goes on the market. So in St. Louis, we have “coming soon” status but it’s not showable. Only when it is active. So, you put in an offer way above ask before you actually physically see the property. This is super risky for both the buyer and the seller.
For seller: Taking an offer when the buyer has not physically seen the property can increase the chances of the buyer backing out when they actually do. As we all know, pictures only tell half the story of a home. Also, once you’ve taken the house off the market, all those buyers who would have put in an offer have moved on.
For Buyer: If you put in a ridiculous high offer…what if the house isn’t even close to that value? How would you know if no one else has had the opportunity to make an offer on it? Same thing with buyer as seller…when you haven’t physically seen the house, what if you hate it? What are your ways to back out?

Things in the article I’ve experienced

1. Calling to schedule a showing and the house is already under contract…within the first day
2. highest and best offer call…I’m loathe to do that on my listings in this market. As a buyer’s agent I usually council my buyers to put in as strong of an offer as they feel comfortable with in advance.

Dangerous quote from the article

But people are so desperate for a home, they’re willing to take on all the risk themselves rather than sharing that risk with a lender, as is standard practice. And with surging prices and new home construction unable to catch up with demand, who can blame them? They’ll be in equity far faster than the five to seven years that’s been the rule of thumb for decades.

It's as if the housing collapse of 2007 never happened!!! What a terrible time that was….and it can always happen again.

Finally:

This article notes that those “suffering” on the lower end of the home buying spectrum. The idea is because they are more likely to go FHA or VA and their loan requirements keep them from making aggressive offers(ones with fewer contingencies)

I think that first time homebuyers are having a difficult time, but not any more so than others. For an example, say a house is asking 380 and it goes for 400. That’s 20k over ask. If a house that has an asking price of 160 goes for 180, it’s still 20k over. All buyers are having a tough go. Sellers are asking for the moon and sometimes getting it. However, when buyers and their agents really understand the pricing and the game, I still think we can get buyers into good solid homes they will enjoy for many years to come.

Podcast call in number = 314-274-3964
media@deerwoodrealtystl.com

Source: https://www.nashvillescene.com/news/citylimits/nashville-s-bonkers-housing-market/article_9fee1dac-de6d-11eb-8292-635c1f0585b7.html

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