Buyer Tips

1) Be slow to react.

If an appraisal comes in below your offer, take as long as 4 days before requesting concessions from the seller. This will raise concern for the seller and their agent in regard to what your intentions are and will often work in your favor.

2) Buy at a comparable price.

In a seller’s market, where home prices are rising, buying a home based on “comparable sales” data is a good way to determine if you are getting a deal on a property. In this type of market sellers can and often DO get a “seller’s market premium” which can be anywhere from 2-5% over TRUE market value. Conversely when you buy based on comparable sales data you have the potential to purchase a home for as much as 6% below true market value; because this data is a lagging indicator, often falling as much as 3% below true market value.

3) Be prepared for closing costs.

Sometimes a buyer may need closing cost assistance from a seller; requesting between 3-6% “seller concessions.” In a contract the language might read, “Seller agrees to contribute 3% towards buyer closing costs and pre-paids.” There can be risks associated with this strategy. The best-case scenario for the buyer and seller would be that the appraisal comes in at or above the contract price and the transaction closes. However, if the appraisal comes in below the contract price, the buyer and their agent must attempt to negotiate a lower contract/sales price; by requesting an addendum to contract in order to have the contract equal the appraisal value. (This assumes the buyer doesn’t have the additional funds to adjust for an appraisal shortfall.) In the worst-case scenario, the buyer will lose the contract because the seller will not agree to price concessions (addendum to a contract) to meet the appraisal value. The buyer then loses both the inspection and appraisal costs which will be near $750.

4) Be wary of homes that are hard to sell.

A buyer should be prudent when purchasing a home that may be hard to sell in the future. Typical home negatives are no rear privacy fence, floor plan issues such as stairs that are overly steep, floor plans that are not functional with poor traffic flow, being located on a busy street, an old roof, wood frame construction (in Florida, buyer’s prefer block and termites prefer wood frame), low ceilings and one car or no-garage.

5) Make your negotiations speedy!

When negotiating with a seller you want things to go ask quickly as possible because another buyer might submit their offer and create a bidding war. Request a counter with an offer-deadline to maintain some of the control in the negotiation process.

6) Offer the seller a contract that will allow you the most flexibility.

A CRISP 13 with a “right in inspect/right to cancel” addendum with standard repair limits of 1.5% is the ideal contract for a buyer. This will put you in the best position as a buyer.

7) An “as-is” contract is okay but a CRISP 13 contract is better.

Buyers still have the right to inspect and the right to walk away for any reason with an “as-is” contract. Just like there is a “walk” addendum attached to the “non-as-is” CRISP 13 contract. An experienced buyer’s agent can make requests of the seller to fix items that are revealed in the home inspection; sellers typically have flexibility and want the deal to close.