Tight inventories will continue in 2022. If you’re preparing to compete to buy a house this year, take advantage of the lessons learned by people who tried and failed before you. Avoid these common mistakes to outsmart the competition, even if you can’t outbid them.
Thinking you have leverage. Ignore negotiating ideas conceived before June 2021. Old-school strategies of feeling out the other side and including throw-away conditions you intend to concede to appear as conciliatory will get you excluded from the conversation. As a buyer, you and I have no leverage.
You are trying to meet in the middle. If your offer is not your best price, what do you gain by setting a price where the seller can meet you in the middle? Owners are not looking to compromise on price in the first two weeks on the market. This strategy only works as leverage for the seller to inspire other buyers to fear losing the house to a better offer. (No one, except the seller, will know your offer is a non-factor.)
You failed to give the owner security. The owner is most interested in two lines on the offer: price and closing date. Money and security. The remaining nine hundred lines and 23 pages of the purchase agreement protect a buyer from committing to close until the last possible moment. Many good-price-offers get rejected for their high-risk contingencies. Review your offer from the seller’s perspective; look for a commitment to go right to closing safely and securely. Contingencies are luxuries of a buyer’s market. If you won’t make an offer without the protection of an escape clause, this might not be your time to become a homeowner.
You give up because you don’t want to get into a bidding war. The competition isn’t what you think it is. Be assured, out of ten offers on the table; the owner might have two offers they could accept as written. More likely, it’s one acceptable offer. Keep this in mind: you’re not competing with ten other buyers even if the owner has ten other offers. You’re only competing with the one or two buyers who submitted offers acceptable as written.
Your offer includes drafting mistakes or ambiguous terms. Most purchase offers submitted this year won’t be rejected because of the price. Owners refuse or pass on most offers because they are not acceptable as written. The Wisconsin purchase agreement forms are almost dummy-proof. Almost. The drafter still has to fill in blanks correctly (Numbers go in blanks preceded by $ signs, and words that complete sentences go in those blanks not preceded by $ characters.) Ambiguity is a fatal flaw. Subjective criteria, undefined terms, and unresolvable contingencies require counteroffers. Owners are not sending counteroffers when they have clean offers in hand. Given a chance to fix their offers, I’ve been told by buyer agents, “just send us a counter.” Some people never know how easy it would have been to get their offer accepted.
You allow your buyer agent to speak for you. The proper way to negotiate an offer is in writing. We will not verbally negotiate with buyer agents. There is nothing but trouble when two agents hammer out some details and expect their clients will understand the scope of the commitment made on their behalf. It’s not often, but sometimes an owner will give one buyer a chance before committing to another offer on the table. I know the buyer agent is trying their best for their client when they tell me their client will never accept the counteroffer I sent. I’ve seen these “unacceptable” counteroffers accepted enough times to know the buyer agent should say nothing but thank you and present the offer. When a buyer agent speaks for his client without presenting a counteroffer, they run the risk of the listing agent reporting the buyer agent’s feelings back to the seller. I’ve seen sellers withdraw counteroffers based on the negative first reaction of buyer agents. No one knows what a buyer or seller will do. Don’t give your authority away.