5 costly ways buyers and sellers sabotage themselves Trulia

he 5 Most Expensive Ways Buyers & Sellers Sabotage Themselves

 

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It’s
easy to see the experience of buying or selling a home as an adversarial one:
you vs. the people on the other side of the bargaining table, with one chess
move by your opponent potentially costing you thousands of dollars.

In
my experience, though, the average real estate consumer’s biggest potential
enemy is him or herself. Buyers and sellers routinely take approaches, make
moves and make omissions that cost themselves much more than anything the other
side could ever do.

The
first step of any cure is diagnosis. Here are some clues to detecting the
costliest cases of real estate self-sabotage so you can stop them in their
tracks, get out of your own way and get back to the business of buying or
selling your home:

1.
Hesitating.  I’m
a big proponent of buying or selling - making any real estate move, really - on
whatever time frame makes sense for your life, your family and your finances,
rather than trying to time the market. That said, once you’ve done the math,
saved your pennies, prepped your property and otherwise decided to move forward
on your home buying or selling plan of action, hesitation can cost you.

• Buyers
  who hesitate to make
  an offer can lose out on a home entirely - or can wait so long another offer
  comes in, forcing them to offer more to beat the other folks out.
• Sellers
  who hesitate to take
  an offer can lose out on a buyer, when a new listing comes on the market that
  catches their eye or better meets their needs.
• Mortgage
  borrowers who wait too long to lock their interest rates can end up paying more
  when rates creep up instead of down.

And
here’s one more for buyers: hesitating to move forward after you get into
contract can also cost you untold stress and deal complications if it snowballs
into a situation where you run late removing contingencies - having to ask the
seller repeatedly for extensions can cost you negotiation goodwill that you
could otherwise have leveraged into repairs or closing cost credits.

I’d
say 90% of hesitation is a result of fear, and fear most often arises when

• we
  second-guess our life decisions connected to the real estate transaction,
• we
  don’t understand or are intimidated by a subject, or
• we
  feel powerless to make a wise decision because we don’t know our options all the
  factors we should be taking into account.

Accordingly,
you can eliminate hesitation-related self-sabotage by:

• working
  through the life and financial decisions that are intertwined with your real
  estate matters completely and
  on paper
  before you start the process, so you can revisit them if and when you’re tempted
  to hesitate

• getting
  as educated as possible in advance about your local market dynamics and
  neighborhood home values, as well as the home buying or selling process in
  general, and
• diving
  head first into the discomfort and uncertainty that everyone experiences when
  they make these major decisions, sitting down with your agent and other pros
  involved to get every question you have answered in a timely manner so you can
  move forward, rather than putting decisions off and “sleeping on it” night after
  night.

2.
Not taking expert advice. Have
you ever taken an indecisive friend out to dinner, watched them hem and haw over
the menu, ask the server what their favorite dish is and then order something
totally different than the server’s choice? That same phenomenon takes place
every day in real estate. Many smart buyers and sellers invest much time and
energy into agent-finding, asking around for referrals, checking agents out
online, interviewing them and even calling around to check references, only to
completely disregard their advice!

If
you have a reputable, competent agent, you might be surprised at how often they
can save you money with simple nuggets of experience-laden advice specific to a
given scenario, like:

• act
  fast
• list
  it lower
• offer
  less/more
• counteroffer
  for more
• be
  aggressive
• take
  the bank’s terms
• don’t
  buy that house
• get
  one more inspection/bid
• don’t
  remove contingencies yet/remove contingencies now
• ask
  for X, Y or Z repair, price reduction, credit, free rent-back, furniture, or
  longer time to close.

Experienced,
local agents have a strong sense for some of the precise things that are so
tricky for a buyer or seller to wrap their heads around, like pricing and
negotiations. You should definitely ask your agent for data and the logical
rationale behind their advice, and should keep asking until you understand and
are comfortable with the decision that you make (whether or not it agrees with
their recommendations). By no means am I suggesting that you blindly take every
piece of advice you are given by any agent, trusted or not.

That said, if
you’re having a hard time getting satisfaction or making progress on your home
buying or selling aims and
your typical reaction to advice from your agent is to reject it, at least
consider that being more receptive to that advice might actually help you get
out of your own way. 

And
if you have a truly hard time trusting your agent’s advice for whatever reason,
consider that you might simply not yet have found the right agent for you.

3.
Overpricing or lowballing.
It might run contrary to conventional wisdom, the idea that asking for more
money or offering less can be acts of self-sabotage, but ignoring the damage
that these acts can do to your real estate plans is unwise. In real estate,
pricing is just more nuanced than that. It’s not the case that you can simply
pick your price, ignoring the financial complexities involved and the
psychologies of the folks on the other side, and expect for good things to
magically happen.

Those
nuances include these truths: setting a list-price that is significantly above
what other, similar homes have recently sold for will not only not get
you that price, it poses the potential to turn buyers off, keep them from coming
to see your home, make your place sit on the market longer than it needs to and
ultimately, it can result in low or no offers. At the extreme, overpricing can
force you to cut the price, sometimes dramatically, to activate buyers who have
learned to disregard the obviously overpriced listing in their online house hunt
search results.

And
buyers beware: making lowball offers significantly below the fair market value
of target homes has a similar impact. Sellers ignore them or counter them up
higher or they get beat out (often repeatedly) by more realistic buyers. I have
seen the tendency to lowball cost buyers thousands over the months they are
trying to get a fantasy-land deal, in terms of home price increases or money
that same buyer ends up throwing at their eventual home, out of desperation and
frustration.

Don’t
let your emotions be the ruler of your pricing or offer decisions. Motivation is
one factor to consider, but the data on recent, comparable sales should be given
much more weight, to keep the threat of price-related self-sabotage in
check.

4.
Cutting corners.
Getting a home ready for sale is a marathon endeavor, not a sprint - especially
if you’ve been living there for a number of years. Same goes for working on your
credit, savings and financial plans in advance of making your first buy: smart
buyers-to-be start years in advance. So, it’s tempting to get near the end of
your preparation action plan, lose patience and start cutting corners on
staging, property preparation, even vetting your own financials and family wants
and needs.

Don’t
submit to temptation - well, don’t submit without the input of your agent and
loan officer. 

Depending
on your situation, there are some corners that might be okay to cut - the ones
that will have very little impact on the eventual outcome of your real estate
endeavors. But give the pros you ‘hired’ the opportunity to give you their input
before you unilaterally skip steps on your original action plan. If you tell
your agent you need to cut your property preparation budget down by a bit, they
can help you decide where the corners you cut will have the least impact on your
home’s overall presentation to buyers. If your loan officer says that paying a
particular credit account down by $4,000 instead of $5,000 won’t really do too
much to your qualification status, you might be fine kickstarting your house
hunt a few months before you had planned to.

Unfortunately,
it’s all too common to see homes where the sellers have poured cash into great,
fundamental repairs and neglected some essential, inexpensive cosmetic items -
or buyers who have fallen just a tad short on cash or credit and end up
scrambling to boost one or both under pressure. Bring your professional team
into the conversation before you cut any corners, and ask them to help you
understand and minimize any consequences of cutting costs.

5.
Failing to read documents all the way through.
Hundreds of your signatures will be requested and required during the process of
buying or selling a home. But perhaps the single-most expensive way real estate
consumers stab themselves in the back is by failing to read and understand nthe
documents they are given - from contracts to disclosures to inspection reports
and even closing/loan documents - all the way through.

Many
a condo owner has been surprised to learn that they are being assessed a hefty
special bill for common area repairs, when that “surprise” was predictable from
a few of the hundred pages of HOA disclosures they received before closing
escrow. Seller disclosures can be cryptic and boring, but also often contain red
flags to guide buyers and their inspectors to the real areas of concern. (Their
guiding power is nil if you don’t read them, though.)

And
the same goes for sellers - your agent should read and help you understand
offer(s), buyer’s inspection reports and requests for repairs or credits,
estimated closing statements and everything else, but ultimately you
are responsible for reading and understanding all of these influential, binding
documents before you sign them. 

So
read them. And
don’t be afraid to ask questions or insist on clarifications and corrections, if
indicated. If you were quoted a certain interest rate or monthly payment, make
sure that matches up to what you see in your closing docs - or that you
understand and accept the reasons why it doesn’t, before
you sign.
This sounds obvious, but you’d be surprised at the major lender-borrower
disputes and buyer-seller legal dramas that have arisen over the years because
of errors in loan or closing documents that could have been detected and
resolved simply, easily and inexpensively before closing.  Don’t be one of
them.

ALL: How have you sabotaged yourself - or seen
others do the same -
in the process of buying or selling a
home?
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