Some buyers are very green when it comes to purchasing real estate. Some believe they are experts in the field. Many are confused. A few terrified. Others are incredibly stubborn. Regardless of their real estate experience, their personalities or their approach to purchasing a home in a hot sellers’ market, it’s up to you to guide them. As their agent, you are there to help them make the right decisions so that they stand a fighting chance in a highly competitive housing market. Don’t let your clients make mistakes that could kill a sale and their dreams of home ownership. Make sure they avoid these four common mistakes homebuyers make in a hot real estate market.
1. Neglecting to understand the market
Clients who move from more affordable markets to higher-priced markets are especially guilty of this. They expect to find comparable homes in size and budget, and they are often disappointed when they don’t. Other clients believe they can take their time until they find their dream home, because they don’t understand how quickly properties move. Spend a great deal of time early on educating your clients about the realities of a hot sellers’ market. Explain why it is the way it is and what strategies you can use to find them their ideal property.
2. Letting desperation guide their actions
Acting out of desperation is one of the biggest mistakes homebuyers make. In a competitive housing market, buyers need to be prepared to act quickly. However, when their desire to purchase a specific house—or just a house, in general—overrides their logic, they can make very poor decisions. They may overpay, commit to unreasonable closing deadlines, waive inspections and appraisals, and more. Rein them in by explaining that other houses will become available. Remind them that they don’t need to blow their budget or forfeit their original buying strategy to find a home.
3. Hesitating to make an offer
Properties move quickly in a hot sellers’ market. That’s why hesitation is one of the worst—and most common—homebuyer mistakes. Buyers who delay making an offer because they want more information, or because they think something better will come along, often miss out. While buyers shouldn’t make too many concessions or act without thinking, advise your clients to move fast if they find a property that they love. Otherwise, they risk losing it to another bidder.
4. Overpaying for a home
Overpaying is also among the most common mistakes homebuyers make in a hot real estate market. In an attempt to compete with other buyers—or simply because they have fallen head over heels—buyers may throw out their budget (and common sense). This can lead them to spend too much money on a property. They may end up purchasing a home they ultimately can’t afford. Some buyers spend so much that they find themselves quickly underwater if the market tanks or even just dips a bit. A bad decision now can cause a great deal of pain down the road.
Strongly urge your clients to set a maximum amount for which they are willing to spend. Advise them to take both their budget and comparables in the area into account. When they step out of their comfort zone, remind them why they set a limit to begin with.
Help your clients avoid the biggest mistakes homebuyers make
Remember, this job is not all about collecting a commission at closing. It’s your responsibility as a respectable agent to coach your clients and help them avoid the most common mistakes homebuyers make, especially in a hot real estate market. The decisions they make now may haunt them for a very long time. So take that responsibility seriously. Your clients will thank you for it.
To learn more, check out our new course on Navigating a Hot Sellers’ Market, designed to help real estate agents close deals quickly and ethically in a hot real estate market.