What are some of the biggest buyer mistakes people are doing right now in this seller’s market here in Utah? Today that’s what I’m talking about. Hi, this is Melissa Ballman and I am a real estate agent here in the Greater Salt Lake City area. So what that means, if you’re looking at making a real estate move, I’d love to connect with you. Shoot me a text, send me an email, do what you got to do, but get in touch with me. But today we are talking about mistakes buyers are making in this seller’s market.
So it’s no secret it is a seller’s market right now and buyers are having to do some crazy things to get a seller’s attention and compete in this space. So today I want to go over a couple of mistakes that buyers, in my opinion, are making when it comes time to buying real estate in a seller’s market. And the first thing and if you’ve watched any of my other videos you know I say this all the time, shop around for a lender. I cannot emphasize this enough.
So not only does a lender have different fees that they charge and programs that they can do, but this actually recently happened to my first-time homebuyer who decided to take my advice and shop around. Well, that buyer found a 3% conventional payment loan. Now, let me tell you how important that is. There are some home sellers right now that will not take FHA, which is Utah housing and other types of first-time home buyer loan programs.
So if they will not take an FHA loan, then you’re already cutting out a lot of ability to the properties that you can purchase. But by shopping around and finding a 3% conventional down loan, that opened up the door to so many more properties for this client. Number two, shopping outside of what you’re comfortable paying or what you qualify for. Gone, gone, gone are the days that if you’re pre-qualified for 400,000, well, you could probably look up to about 415 and try to negotiate down and things like that.
That is not the case. It’s actually the opposite. If you qualify for 400,000, then realistically you probably don’t want to be shopping for anything over about 385 and leave yourself at least a $15,000 buffer. Now, one of the reasons this is important is because obviously the higher the price goes typically in a lot of situations it’s going to be a more desirable home to people. So of course you don’t want to get your heart set on a $425,000 house if you can only afford 400,000.
So not only is that heartbreaking for you, but it’s honestly a waste of time for everybody involved. So while we’re talking pricing and loans, let’s get the elephant out of the room and that is especially if you are a first-time homebuyer, get your foot in the door. I hate to say it this way, but I don’t know any other way to say it. And that is you are probably not going to be able to afford to buy your dream home. This market is high and it is a, like I said, a seller’s market, high sales prices.
So as a first-time homebuyer or really any buyer, if you’re looking to move into this area and you just want to get your foot in the real estate door. So kind of decide what is more important for you, getting into the real estate market and giving up some things or getting priced out. Now, I did see this happen when I lived in San Diego and that is people were way pickier than they should have been. And then they priced themselves out of the market because it wasn’t in a nice enough neighborhood, or the home was a little older than they wanted, or it didn’t have a garage.
You name it, I’ve heard it. But in this particular situation, I personally know somebody that was far too picky as a first-time homebuyer wouldn’t settle on a couple of things like, “Oh, the neighborhood I grew up in isn’t good enough. I want to live by the beach.” Well, that’s great, but living by the beach is extremely expensive. It ended up taking this person about 12 years before they ended up being able to afford to buy a house because they waited and they were too, too picky.
Now I’m not saying, just go out and buy anything just to get your foot in the door. Of course, I’m not saying that but come to the realization that you may just have to settle on this home and give up a few things. So an example, if you want a garage, why not a carport or if the loft is big enough that you could add a garage later on down the road. So there’s things like that that you should think about and try to maneuver. If it’s a doable situation. It’s not ideal, but it gets you in.
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Next, not accounting for all of the costs that are associated with buying a home. And I have done videos on this before and I’m going to drop a few in the description. So if you want to go back and look at those, but don’t underestimate how much closing costs are going to be. Don’t forget that if you’re getting an appraisal and an inspection, those have to be paid for out of pocket before the closing and you are going to have to do earnest money deposit.
So there are expenses that you need to account for and get a full understanding of how much money you’re going to have to bring to the table for closing with your down payment, your title insurance, closing costs, lenders fees, all of that. Next and this kind of goes a little bit in line with what we talked about before, but don’t drain your savings to buy a home. Because you’re shopping outside of your means or things are a little bit uncomfortable in the price range you’re at. Homebuyers make this mistake and it’s really heartbreaking because when you own a home, expenses are constantly coming up that are unplanned obviously, and you’re not prepared for.
So if you drain your savings to come up with your down payment and everything, what are you going to have to pay for expenses that may come up? Perfect example. I have a washer and dryer that’s less than four years old brand new that we bought brand new and the washing machine is going out. And at the same time, my refrigerator is going out and it’s new too. So there are those things that happen as a homeowner. I can’t call a landlord and say, “Hey, my washer and my refrigerator are going out. I need a new one.”
No, that’s up to me that I have to buy and pay out-of-pocket. I can’t live without a refrigerator in my house. So make sure you save for a rainy day and have that home emergency fund. Think you’re going to sleep on it over the weekend and think about it? Well, think again. Gone are those days too. Another mistake I see buyers make is they really love a house, but they want to think about it over the weekend or anything like that. So not only is communication between agents going to be critical, but you have to understand as a buyer even if I call a seller’s agent and they say, “Oh yeah, we’re not going to review offers until Monday” and today is Friday. And so you think you have a couple of days to think about it.
Well, it is up to that seller. They could change their mind the minute I hang up the phone and they don’t have to notify me. Now, it’s not exactly the nicest thing to do, but that’s not what we’re talking about. Legally, the seller has a right to take any offer they want when they want and there’s nothing you can do about it. So be prepared to write an offer pretty quickly. I’m not saying on the spot, but usually, in this market, you don’t even have 24 hours before you need to be having your offer in.
And finally, the buyer broker agency agreement. You need to understand what it is and what that means to you as a buyer. So understand that that is a contract that you’re signing with the buyer’s agent and the buyer’s brokerage and yourself. So if you’re hopping around, not only is that unethical and not cool to do to the agents involved, but you could potentially be held liable to those agents for their commission amount if you go and buy a house with somebody else and you have agency agreement with a different agent.
So there’s a lot to it. It’s not a quick conversation over video, but I hope you enjoyed the video today. If you have any questions, feel free to reach out to me, but as always, make it a great day.