Our real estate colleagues face a serious challenge in today’s market: buyer burnout.
It’s something I’ve never seen before here in NOLA, and I’ve been writing loans for a long time.
Housing inventory is non-existent. Buyers are competing with other offers on many homes.
Their bids are often not accepted. They’re frustrated. Many are just giving up.
This kind of thing has been common for years in other markets. But never here.
As a real estate agent, what can you do to avoid this?
Current Market Conditions
I was on the phone with a first-time homebuyer last night until 10 pm. They have their hearts set on a house in their budget. But the agent tells us there are already 3 offers on the house, and they expect more in the morning.
Unfortunately, this is happening almost daily right now.
We have 3 times the number of people applying for mortgages to buy homes, yet just a small portion can actually get contracts accepted to purchase.
We’ve had client after client tell us that they’ve made 3-4 offers on different homes, only to lose each one.
Eventually, many of them are just giving up right now and deciding to wait.
This Is Now Mandatory
As an agent, it’s critical to have your buyers fully pre-approved for a loan before they start shopping.
Anyone can give you a pre-qualification letter. That simply means they’ve glanced at the credit and think they will be able to get a mortgage.
Pre-qualification letters are not going to be taken seriously by sellers with 3-5 offers on their home. Sellers want offers from buyers who have rock-solid letters of approval from reputable lenders.
If you aren’t doing so already, please send your clients to get fully pre-approved early in the process.
Walking a Fine Line
Another reason getting pre-approved is so important is that buyers are facing decisions right now about offering MORE than asking price on homes if they really want to get them.
If you’re pre-approved, you will know exactly how high your buyer might be able to go in a bidding war without jeopardizing their deposit or your reputation as the agent.
We’re seeing many situations where buyers are offering more than the sales price by 10-15%.
In these cases, you have to be careful with debt-to-income ratios. This risk can be minimized by a pre-approval.
Also, buyers have to watch for the appraisal contingency. Meaning that if the house doesn’t appraise for the higher offer, the buyer needs to be prepared to bring that cash to the table as part of the transaction.
Obviously, this is not possible for everyone.
Experience Has Never Mattered More
The reality is that carefully evaluating each buyer’s situation has never been more important than it is today.
Helping buyers navigate these life-changing decisions in a demanding market is what gets us out of bed in the morning.
If it’s been a while since we chatted, let’s catch up. I’d love to talk to you about what’s going on in the market right now and how we can help.